DIIs pump record ₹7.1 trillion into equities, offsetting heavy FPI outflows

Domestic institutional investors, led by mutual funds, have invested Rs 7.1 trillion in equities over the past year, cushioning markets from persistent FPI selling

Domestic institutional investors (DIIs) — led by mutual funds — are pouring money into Indian equities at an unprecedented pace. On a trailing 12-month (TTM) basis, covering the past 250 trading sessions, DIIs have injected ₹7.1 trillion into domestic stocks — the most ever.

 

Mutual funds alone accounted for roughly three quarters of the inflows, or ₹5.3 trillion. 

The surge is being driven by the rising popularity of systematic investment plans (SIPs) in equity mutual fund schemes, which have become a structural engine of steady domestic inflows.

 

As households channel more of their savings into equities, DIIs are playing a pivotal role in offsetting the volatility created by foreign portfolio investors (FPIs). 

 

 

Since July, FPIs have withdrawn more than ₹40,000 crore from Indian equities. Yet the heavy selling has been cushioned by strong DII inflows.

 

According to ICICI Securities, the scale of counter-buying by DIIs against FPI outflows has surpassed earlier episodes of foreign selling. “The overwhelming counter-buying by DIIs against FPI selling is much higher than that witnessed during any other instance in the past, including the global financial crisis of 2008 or during the interest rate spike-driven selling of 2022,” Vinod Karki, equity strategist at ICICI Securities, said in a note.

 

Even so, persistent FPI outflows have weighed on market performance. Over the past 12 months, benchmark indices across large, mid, and smallcap segments have delivered flat to negative returns.

 

Notably, before the latest bout of FPI selling in July, both DIIs and FPIs were net buyers during the June quarter (Q1FY26). ICICI Securities observed that these purchases were largely offset by selling by promoters, individual investors (with the exception of smallcaps), and some foreign direct investors.