DIIs Invest Over ₹1 Lakh Crore in Stocks in 2025, Offsetting FII Sell-Off

Domestic institutional investors (DIIs), who recorded an unprecedented year of net purchases in 2024, have maintained their aggressive investment approach into the current year. Their cumulative buying has already exceeded the ₹1 lakh crore milestone, even as foreign institutional investors (FIIs) continue to offload Indian equities at a significant scale.

As per NSE data, DIIs have infused ₹1.2 lakh crore into the equity markets since January, whereas FIIs have divested nearly the same amount—₹1.06 lakh crore. In the previous year, DIIs emerged as net buyers, accumulating over ₹5.22 lakh crore in equities, setting a new record. In contrast, FIIs concluded the year as marginal net sellers, with total divestments of ₹427 crore.

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Market Performance Amid Volatility

Despite domestic inflows providing some support amid market turbulence, the benchmark indices—Sensex and Nifty—have each declined by over 3% so far this year. Meanwhile, broader market indices such as the BSE MidCap and BSE SmallCap have suffered sharper declines, dropping over 20% each.

Concerns Over Retail Investment Slowdown

In its latest report, brokerage firm Jefferies has cautioned that the steady inflow of retail funds into Indian equity mutual funds might decelerate as market returns weaken. A slowdown in household investments in domestic equities could further pressure Asia’s fourth-largest stock market, which has been in a downward trajectory since late September. This decline has been driven by an ongoing earnings slowdown and persistent foreign fund outflows, the report noted.

Future Outlook for DIIs

Looking ahead, market experts suggest that while DIIs might reduce their pace of investments if market weakness persists, a complete halt is unlikely. With valuations approaching their long-term price-to-earnings (PE) averages, the market is becoming more attractive for investors.

Additionally, sustained systematic investment plan (SIP) inflows, exceeding ₹25,000 crore per month, ensure a steady liquidity pipeline for DIIs. The preference for Indian equities remains robust due to stable macroeconomic conditions, limited alternative investment options, and earnings growth in key sectors such as banking, automotive, and consumer goods, according to analysts.

Key Market Support Levels and Recovery Prospects

Narinder Wadhwa, Managing Director & CEO of SKI Capital Services, commented that in the short term, market volatility may persist due to continued FII selling, global uncertainties—including the US Federal Reserve's policy, geopolitical risks, and Trump’s recent tariff measures. However, he expects strong support around the 22,300–22,500 levels on the Nifty, where fresh buying interest could emerge. Medium-term recovery prospects remain intact, driven by potential RBI rate cuts, strong domestic demand, and long-term economic growth fundamentals.

Sectoral Outlook and Investment Trends

Experts further highlight that sectoral rotation will be a key factor, with banking, consumption, and infrastructure sectors expected to outperform. In contrast, high-valuation sectors such as IT and new-age technology may face pressure. While short-term market corrections remain possible, DIIs are likely to continue providing stability, preventing a steep downturn unless a significant external shock occurs.