25 August 2025 – Domestic institutional investors (DIIs) continue to provide strong support to Indian equities, offsetting heavy selling by foreign portfolio investors (FPIs).
Record DII Inflows vs. FPI Outflows
According to ICICI Securities, over the trailing 12 months, DII inflows touched a record $80 billion, nearly twice the FPI outflows of $40 billion. The counter-buying by DIIs has surpassed earlier episodes of FPI selling, including the 2008 Global Financial Crisis and the 2022 sell-off.
Market Impact
Despite robust domestic support, indices across market capitalisations have delivered flat to negative returns over the past year, reflecting the drag from persistent foreign withdrawals.
FPI Trend Reversal
- April–June 2025: FPIs were net buyers, with inflows of $1.2–2.3 billion per month.
- July 2025: Sharp reversal, with FPIs pulling out $2.9 billion.
- August 2025: Selling intensified, adding to volatility.
In contrast, other Asian markets like Japan ($16.1B inflows in July, $12.5B in August) and Taiwan ($18.3B in July) attracted strong foreign money.
Role of SIPs
A key driver of resilient domestic liquidity has been the steady rise in Systematic Investment Plan (SIP) contributions. With households shifting savings from traditional instruments to equities, SIP inflows have structurally strengthened the DII base, ensuring stability even during periods of aggressive foreign selling.
✅ Key Takeaway: DIIs have emerged as the shock absorbers of Dalal Street, keeping markets afloat despite heavy FPI withdrawals, underscoring the growing dominance of domestic capital in India’s equity markets.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult their financial advisor before making any investment decisions.
