DIIs Inject Record $80 Billion into Indian Markets, Doubling FPI Exits

Domestic Institutional Investors (DIIs) have poured a record $80 billion into Indian markets over the past 12 months—an inflow twice the volume of Foreign Portfolio Investor (FPI) outflows, which stood at $40 billion, according to a report by MoneyControl.

DIIs Offset Hefty FPI Selling

DIIs have kept up a strong purchasing momentum in spite of ongoing volatility and uncertainty, which has helped counteract international investors' continuous selling. The 2008 financial crisis and the 2022 market downturn are dwarfed by this amount of net DII investment.

Before the FPI reversal in July 2025, foreign investors had been net buyers across market capitalisations during the first quarter of FY26—accumulating equities alongside DIIs, with supply primarily coming from promoters, retail investors (aside from small caps), and foreign direct investors.

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Market Mood Buoyed by Domestic Support, Yet Capped by FPI Disquiet

Notwithstanding strong domestic support, India’s indices have delivered flat to negative returns over the past year. Analysts point to the continuous FPI outflows as a dampening force, even as DIIs absorb the excess supply.

Outlook 

Looking ahead, experts predict that the strength of DII inflows will remain a critical stabilising force for Indian markets, particularly as global uncertainties continue to influence foreign investor behaviour. With mutual funds, insurance firms, and pension funds steadily expanding their equity exposure, domestic flows are expected to act as a cushion against further FPI withdrawals.

However, market direction will also depend on global interest rate trends, commodity price movements, and geopolitical developments. If foreign participation improves alongside continued domestic support, Indian equities could see stronger upside momentum in the coming quarters.

Conclusion

Unprecedented DII inflows over the past year have supported Indian stocks, successfully offsetting significant international sell-offs.  Overall market performance is still being held back by persistent FPI withdrawals, notwithstanding the notable stability provided by domestic institutional buying.  Future market prospects will depend on the recovery of FPI mood, worldwide economic developments, and DII tenacity.