An insightful podcast from Capitalmind discusses the recent FII selloff, which also personally affected me. Got to learn quite a few things from it.
On FIIs.
The reason they are called institutions is because they are not principles themselves. They have investors behind them.
Indian investor, apparently, has it easy! At least easier than their US counterparts.
Now, this is interesting because only registered financial institutions can buy in India, which means that your friend who is an American citizen who lives in America and is not an Indian, cannot buy Indian stocks directly. Why is this interesting? Because you as an Indian can buy American stocks living in India.
FII is not the same as FDI.
Now, if you come back to what FII is, we actually got two concepts. One is FDI and one is FII. The concept of an FDI is essentially something where you say, a foreign direct investor is a person who comes in strategically…
…It was like I am directly investing and participating in the story of an Indian company who I strategically control. This was Coke, was Nestle, was Pepsi, was a bunch of other people. They invested under the FDI route…
…But we have to consider that FII is what is called an FPI, Foreign Portfolio Investor. This is a mutual fund that comes in West India. They expect to invest in India and take money out, but they don’t own the company meaningfully, in the sense of controlling the company.
And apparently what is happening now is that both FII/FPI and FDI are selling rather than just the FII/FPI selling.
By the way, HDFC Bank is probably majority owned by foreign entities. ICICI Bank is probably majority owned by foreign entities, so as a bunch of other banks
What?
*checks notes*, I mean *checks moneycontrol*
FIIs own 48% of HDFC Bank. FIIs own 46% of ICICI Bank. 1
…the fact is that the foreign ownership was quite high, why should it have ever happened in the first place? There are very interesting sinister reasons.
Listen on to hear some interesting stories from the past and how they affect the present.
Footnotes
- Data as of 13-Dec-2024 ↩︎