Domestic institutional investors (DIIs) have brought a record $80 billion of flows into India's secondary market in the last year, more than doubling the $40 billion of outflows registered by foreign portfolio investors (FPIs), based on industry data.
A study by ICICI Securities pointed out that while Dalal Street witnessed recent market volatility, DIIs have jumped in to counter-buy during FPI offloading at levels above the ones registered during earlier episodes of market stress, such as the 2008 Global Financial Crisis and the 2022 offloading.
In the last 12 months, indices in all capitalisation segments have delivered flat or negative returns with heavy FPI selling in recent months curbing total returns despite strong domestic participation.
Meanwhile, this year alone, DIIs have pumped over Rs 4 lakh crore into the Indian share market, the biggest cash market inflow by this constituency in the first seven months since 2007.
Between April and June, FPIs saw inflows of between $1.2 billion and $2.3 billion, but the trend reversed in July with outflows of $2.9 billion, a trend repeated in August.
ICICI Securities pointed out that prior to the FPI flight in July 2025, foreign investors were net buyers in all market segments in the first quarter of FY26. DIIs and FIIs bought shares, while promoters, retail investors (with the exception of small caps), and foreign direct investors were net providers of equity.
In July 2025, FPIs took out $2.9 billion from India, while others in Asia drew huge inflows—Taiwan $18.3 billion, Japan $16.1 billion, and South Korea $4.5 billion. In August, both India and South Korea continued to register outflows, while Japan attracted $12.5 billion and Indonesia $515 million.
During the first seven months of 2025, DIIs have contributed over 80% of the total market inflows and have been instrumental in sustaining the equity market. The year-to-date DII inflows stand at 2.2% of the average Nifty market capitalisation, which is the highest share since 2007.
