FIIs & DIIs were net sellers today then why did the market rise

[aryan.]

FIIs and DIIs were net sellers by 230 crores and 402 crores respectively today. If they were not buying then how did the market rise today??

Or were the FIIs and DIIs buying stocks which are part of the index and selling stocks which are not part of the index.

 

[iamaaditya]

Your question prompted me to do little research on this.

On a multiyear data there is correlation of 0.42 of FII (Net) vs direction of Nifty and in short term (multimonth) it is 0.61 (both according to me is really significant ) and proves the known understanding that its FII which moves the market.

Coming to your question, in last 4 year data there were only 24 days when market was up when both FII(net) and DII(Net) were negative (i.e 2% of all days) and inversely there were 52 days (4.7%) when market was down even though FII(net) and DII(net) were positive.
I believe these are really very small number and thus are not significant enough beyond normal noise (random proabability).
Actual reason for this could certaily be more selling in non-index funds (but as I wrote earlier, this is not a significant portion because of higher correlation of market movement with FII data).

well, i am still working with few data and will let you know if I come up with more info.
At best I can tell you that these 24 days were the days when the average buy/sell (FII) was at average or better than average buy/sell amount (and none of them below 1 SD of mean) (so those were not non-impact days (days generally having american/christian holidays))

by the way, what is the source of the pic ?

 

[AW10]

my guess - They smartly hold the index (and hence the market) up by buying index stocks. At the same time, they dumped non-index stock, where they got better price cause some people would have thought that non-index stocks will once again going to the moon.

On the side note, it is in their interest to hold the index up and save their face, in quarter end window-dressing. Atleast it shows that their investment has done better (even if this window dressing helps them to earn extra 0.1 to 0.3% return).

This is the game smart money plays. I wouldn't read too much into it and wait for next few bars to tell me in which direction they are pushing the market.

Happy trading and watching the foot print of smart money.

 

[bharatk8]

Dear AAditya,

Nice.May I have the list of those days?

Coming to your question, in last 4 year data there were only 24 days when market was up when both FII(net) and DII(Net) were negative (i.e 2% of all days) and inversely there were 52 days (4.7%) when market was down even though FII(net) and DII(net) were positive.

 

[iamaaditya]

Dear vxl

here you go

https://docs.google.com/spreadsheet...pXdE52ZFZ4UDlzUUctYnRHd3FrcWRjTmc&output=html

(up days and down days are in different sheets)

 

[tradepundit]

how can i know the basics of trade....i am an ametuer into the market for over 10 months

 

[iamaaditya]

how can i know the basics of trade....i am an ametuer into the market for over 10 months

Honestly , read few books (I would earnestly recommend - Elder Alexander - Come Into My Trading Room - A Complete Guide To Trading) and also watch the market (live - if can get the time). (else watch the EOD chart of major stocks at night)
Then start paper trading and repeat the steps again till you find yourself with confidence and profitable strategy)

 

[aryan.]

Thanks a lot Aditya for your wonderful analysis.

I got this chart from here

http://craytheon.com/charts/fii_dii_nse_bse_trading_chart_graph.php