Domestic Investors Pump Over ₹5 Lakh Crore into Equities for Second Straight Year

With net purchases surpassing ₹5 lakh crore in 2025, domestic institutional investors (DIIs) have once again demonstrated their increasing dominance in Indian stocks. DIIs have achieved this milestone for the second year in a row, highlighting their function in maintaining market stability in the face of ongoing foreign outflows.

DIIs Lead Domestic Market Support Amid FII Outflows

Provisional data from the NSE shows that mutual funds, banks, insurers, and other domestic institutions have bought shares worth ₹5.13 lakh crore so far this year. In 2024, DIIs had invested a record ₹5.25 lakh crore, while in 2023, net purchases were significantly lower at ₹1.81 lakh crore.

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The strong domestic buying comes as foreign institutional investors (FIIs) continue to sell. According to NSDL, FIIs have withdrawn over ₹1.6 lakh crore from Indian markets in 2025, following a net outflow of nearly ₹1.21 lakh crore in 2024. Analysts say that DII inflows have been crucial in offsetting this pressure, even as promoters offload stakes and private equity funds book profits.

Market Performance and Sector-Wise Gains Remain Mixed

However, the heavy DII support has not translated into broad gains across all sectors. Bloomberg data shows that only about 30% of BSE500 companies have delivered positive returns in the past year, while the remaining 70% have declined. This highlights that strong liquidity alone cannot ensure market-wide growth.

In terms of indices, the Sensex has risen 2.1% and the Nifty 50 Index by 3.1% in 2025, whereas the BSE MidCap index fell 3.9% and the SmallCap index dropped 6.8%. Analysts emphasise that DIIs are playing a key role in maintaining market stability despite uneven performance across mid- and small-cap stocks.

Domestic participation is steadily increasing as households invest more in equities, driven by higher incomes and a long-term investment mindset, said an independent market expert. Analysts added that DII flows are a major reason for the market’s resilience, reflecting a gradual shift of household savings into equities.

Conclusion

Domestic institutional investors have once again emerged as stabilisers in Indian equity markets, with net inflows crossing ₹5 lakh crore in 2025. While broader market gains remain selective, the trend underscores growing domestic participation and the increasing role of household and institutional savings in supporting market stability.