FII and DII: Definition, Importance & It's Working (2023)

Table of Contents

FII and DII stand for the Foreign Institutional Investor and Domestic Institutional Investor respectively. FIIs are an institution or fund houses incorporated outside India. They are also registered with SEBI and make an investment in the Indian security market. FIIs are also known as FPIs (Foreign Portfolio Investor). Example: EURO PACIFIC GROWTH FUND.
DIIs are an investor or fund houses based in the same country where they are investing their money. Example: Mutual Fund Houses.

FII Full Form:

FII full form is Foreign Institutional Investor. FIIs are an institution or fund house incorporated outside India. They are also registered with SEBI and make an investment in the Indian security market. FIIs are also known as FPIs (Foreign Portfolio Investor). Example: EURO PACIFIC GROWTH FUND.

DII Stands For:

DIIs are an investor or fund houses based in the same country where they are investing their money. Example: Mutual Fund Houses.

How they work?

Both FII and DII have high-quality research teams and are registered with the Security Exchange Board of India (SEBI). Compare to DIIs investment, we focus more on FII investment and activities because of their research quality.

Based on the research FII and DII invest in particular security like stocks, bonds, etc. but the quantity is really huge. It is no need to mention that purchasing power of FIIs is much bigger than DIIs. That is why FIIs and DIIs are named as market movers because their buying and selling quantity moves the market direction.

Their Influence in the Security Market

As we have already mentioned that both FII and DII have high-quality research teams, but FIIs are comparatively better in case of finding out good quality stocks.

As a retail Investor, we do not have sufficient infrastructure or a team for finding good security to invest neither we have that large amount of money that can influence the price movement.

FIIs/DIIs have these above-mentioned qualities, i.e. they have a high-quality research team as well as huge money to invest which can influence the price to a certain extent.

Importance of Monitoring the Impact of FIIs on a Daily Basis

A retailinvestor can follow the footprint of FIIs or DIIs like where they are investing, which security they are buying or selling etc. What we can do as retail investors is that by following their steps, we can earn a decent amount of money without any kind of research or spending any time to find a good quality stock. As an individual, we know it is really very difficult to find out the all necessary information about a company while researching a stock. So in the research part, we can rely on them to a certain extent.

When FIIs/DIIs are investing in some particular company, it is a good hint for us that the stock might perform in the future and we can invest in such a company. So money inflow of FIIs and DIIs work as a good indicator.

We can do the same when they are taking an exit from a stock. If we are holding that stock and they are taking their money out, we can decipher that the stock has reached its optimum level now we should book our profit.

How to monitor FII and DII activities on StockEdge?

In the FII/DII tab, there are four different tabs in this section. We will cover them one by one.

Day wise:

In this tab, you will find net buying and selling done by FII and DII for that particular day. Data are represented by the positive and Negative bars which make the whole picture very easy to understand at one glance.

There are also data available for the last ten trading days. Along with that, you will also find the current market price of Nifty and the status of India vix for each day.

FII and DII: Definition, Importance & It's Working (4)

CM Provisional:

CM provisional tab provides net Buying and Selling data only for the cash market.We can also switch between the tab by clicking on FII and DII to check their activity separately.To check the Monthly or Yearly activity, we have to click on the Monthly and Yearly tab.The daily tab provides the data for the latest quarter but in the monthly and yearly tab, data are available for the last ten years.

Please remember these data are provisional data, not accurate data. These data are provided by brokerage houses.

FII and DII: Definition, Importance & It's Working (5)

CM SEBI:

This tab is quite similar to the CM provisional tab but the data here are accurate and only FII data is available. SEBI provides this data and they are backed by FII custodians.In this tab, we can also Switch between Daily, Monthly, and Yearly data just like the CM provisional tab.

Here two more things are added here –

We can switch between the different markets like Equity and debt by clicking on the Equity tab.Also, we can switch between Primary and Secondary markets by selecting the Secondary Market option.

FII and DII: Definition, Importance & It's Working (6)

FII Derivatives Data

The Derivatives tab only focuses on the Derivatives data of FII. Here we get the data for Index Future, Index option, Stock option, and Stock Future.The latest quarter data is provided here for all the four-segment.Traders who love to trade in Future markets and options would find this tab very handy and useful.

At a glance, you will have an overview of the whole Derivative Market transaction done by FIIs.

FII and DII: Definition, Importance & It's Working (7)

Watch this video to know more about how to use FII and DII segments:

Frequently Asked Questions

Why FII and DII are opposite?

Both have different styles of investing in India. DIIs tend to hold stocks for the long term whereas FIIs have a medium- to the short-term horizon. According to research conducted on the trading behavior of both FIIs and DIIs in the Indian stock market scenario, it is evident that they adopt opposite trading strategies.

Who are FIIs in India?

EURO PACIFIC GROWTH FUND, Govt. of Singapore, Vanguard is the top FIIs in India.

Who comes under DII?

Indian Mutual Funds like HDFC AMC, Indian Insurance Companies like LIC India, Local Pension Funds, and Banking & Financial Institutions come under DII.

Bottomline

The mistake is very common while choosing a good quality stock after all we are human beings. Even FIIs or DIIs can also make mistakes, so fully depending on them for stocks would be very risky without any kind of market knowledge.

It is very difficult to time our entries and exits along with their entries and exits. We do not want to invest when the price has reached its optimum level. It is not a bad idea to make a decent amount of money by following the market movers but you should also know when to enter when not to. So market knowledge is always important. You can join our StockEdge club to stay updated about the market and on this platform we share stock ideas, knowledge related to different types of analysis, stocks, bonds, etc. Here your every query related to the market is answered by experts.

StockEdge application can help you from finding out FII/DII activities to what stock you should invest in based on your pre-defined conditions. Apart from that, there are also some other exciting features including educational videos and study material and many more interesting features.

Click here to know more about the Premium offering of StockEdge.

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Also Read more blogs from StockEdge blog pages.

Tags: CM ProvisionalCM SEBI

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