New Delhi, Jan. 14 -- The Indian market has exhibited considerable strength over the past few years and has managed to show quick recovery from sharp corrections driven by the selling of stocks by Foreign Institutional Investors (FII). The principal reason for this is the contrarian buying patterns exhibited by Domestic Institutional Investors (DIIs).

When the FIIs turn to net sellers and withdraw funds from Indian markets, the DIIs make adequate purchases, which weakens the FIIs' selling pressure in the markets and mitigates market crashes. Here, we will explore the key determinants of the DII purchases triggered by FII outflowing their investment.

To understand why DII buys during FIIs' outflows, one needs to understand first who FIIs...