InvestorQ : What is the difference between Foreign institutional investment(FII) & Domestic Institutional Investment(DII)?
Dhwani Mehta made post

What is the difference between Foreign institutional investment(FII) & Domestic Institutional Investment(DII)?

Answer
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Dia Deshpande answered.
4 weeks ago


Equity inflows consist of capital inflow into stock markets. This equity inflow can be broadly divided into 2 categories-

  • Foreign institutional investment (FII)
  • Domestic Institutional Investment (DII)

FII refers to investors from other countries putting money in Indian stock markets. These are in the form of sovereign wealth funds, investment trusts, mutual funds, pension funds apart from banks. DII, on the other hand, comprises local mutual funds, insurance companies, local pension funds, and banking and financial institutions. Stock markets are primarily driven by institutional money.

FIIs and DIIs account for the bulk of the liquidity in the market. Tracking their inflows and outflows can help predict the broader trends in the market. Historically, FIIs have had a greater influence on the domestic markets. FPI equity inflows refer to foreign portfolio investment. FIIs generally bring in FPI capital flows to the country. Thus, FPI inflows are a part of the FII category.