2.19Who are institutional investors?
1What is it?
Institutional investors are organisations that invest large pools of money on behalf of others.
2Why does it exist?
They do deep research and invest thousands of crores, so their buying and selling strongly affects prices.
3Stock market example
Examples: mutual funds (SBI MF, HDFC MF), insurance companies (LIC), pension funds (EPFO invests in ETFs), banks, and foreign funds. In IPOs they appear as QIBs (Qualified Institutional Buyers).
4Quick revision
- Institutions invest others’ money.
- Large size gives them price influence.
- Called QIBs in IPOs.
5Knowledge check
Q1. Give two examples of Indian institutional investors.Show answer
LIC, SBI Mutual Fund, EPFO, banks.
Q2. What does QIB stand for?Show answer
Qualified Institutional Buyer.
Q3. Why do institutions move prices?Show answer
Because of the size of their trades.