DII Equity Inflows Fall To 10-Month Low In February

Domestic institutional investor flows into equities weakened in February. Net purchases during the month stood at ₹26,130.3 crore, according to provisional data.

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This marked the lowest monthly inflow since April 2025. The figure represents a decline of more than 50% compared with the average monthly buying over the previous six months.

The slowdown followed a period of strong domestic participation in equities. Over the past three months, DII inflows had ranged between ₹69,000 crore and ₹79,000 crore.

Composition Of Domestic Flows

Domestic institutional investors include mutual funds, insurance companies, pension funds, and corporate treasuries. These institutions have been the primary source of support for Indian equities since September 2024.

That period coincided with sustained selling by foreign investors. Domestic inflows had helped offset foreign outflows during phases of market volatility.

February marked a departure from that trend. Lower inflows reflected reduced buying across equity-oriented products.

Market Performance Context

Equity market returns over the past 15 to 18 months have remained muted. Since September 2024, benchmark indices have posted limited gains.

During this period, the Nifty declined 2.7%. The Sensex fell 4.2%.

Broader markets underperformed benchmarks. The Nifty Midcap 150 index declined 1.3%. The Nifty Smallcap 250 index fell 13%.

Market volatility was more pronounced in mid-cap and small-cap segments. These segments had earlier attracted a significant share of domestic inflows.

Shift Towards Precious Metals

Domestic investor allocation patterns showed a shift during the period. Flows into precious metal investment products increased in recent months.

In January, monthly inflows into gold and silver schemes exceeded those into equity funds. This marked the first such instance in recent years.

Silver and gold prices recorded sharp gains during the period. The performance differential influenced incremental asset allocation decisions.

Equity schemes, which had been the primary growth engine for the mutual fund industry, saw slower inflows.

SIP And Retail Participation

Systematic Investment Plans continued through February. However, incremental allocations moderated compared with earlier periods.

Retail participation had remained strong during earlier phases of market weakness. Recent uncertainty and relative underperformance tempered expectations of near-term recovery.

Some investors reassessed allocations after reviewing returns over multi-year holding periods. This influenced the pace of fresh equity investments.

Foreign Flow Context

Foreign investors turned marginal net buyers in February. Net foreign purchases stood at ₹895.6 crore during the month, based on exchange data.

This followed a prolonged phase of foreign selling. Since October 2024, foreign investors have sold shares worth over ₹4.02 lakh crore.

Over the same period, domestic investors purchased equities worth more than ₹10.6 lakh crore.

Broader Allocation Landscape

Other emerging markets recorded stronger equity performance during the period. This influenced global capital allocation decisions.

Relative performance differences shaped investor positioning across regions. Domestic flows responded to these trends alongside asset-level performance.

February marked a slowdown in domestic institutional equity inflows after several months of strong participation. The decline coincided with muted equity returns and increased allocations to precious metals.

Domestic institutions remain a key source of market liquidity. Flow trends continue to reflect performance, volatility, and relative asset returns.