InvestorQ : Can I adopt of a strategy of selling in the market when FIIs are selling?
Mahil Khan made post

Can I adopt of a strategy of selling in the market when FIIs are selling?

Jignesh Gupta answered.
3 years ago
Foreign Portfolio Investors (FPIs) are a very important force driving our markets. They are large and they influence the stock market as well as the rupee markets and hence their impact is a double impact. But can you sell just because the FIIs are selling? Focus on the word “consistently”. In any month, there are going to be days when FIIs sell. That is more likely to be routine profit booking and you need not be worried about that. But look at the situation like 2008, 2011 and 2015 when FIIs turned consistent sellers and the markets corrected sharply from these levels. FIIs will sell on a consistent basis only when they have changed their view of the Indian market for a period of time. Since these FIIs are the largest contributors to cash delivery volumes, they will have an oversized impact on markets.
Don’t get carried away by daily numbers. Quite often, FIIs indulge in arbitrage transactions wherein they buy in the cash market and they sell in the futures market to lock in the assured spread. They may also unwind their arbitrage positions. Such trading may look like buying or selling by FIIs but that is not the case. Be cautious about interpreting such signals only after you look at the futures and options data too. Such data is disclosed by the custodians on a daily basis.