Domestic institutional investors (DIIs) have net purchased Indian equities worth over Rs 4.16 lakh crore in 2026, while foreign institutional investors (FIIs) have net sold shares worth Rs 2.7 lakh crore. This trend highlights the contrasting investment strategies of DIIs and FIIs amid global uncertainties.
In the current month alone, DIIs have bought shares worth Rs 39,098 crore, while FIIs have sold nearly Rs 35,445 crore. This pattern has been consistent throughout the year, with DIIs showing resilience despite market volatility. In January, DIIs net bought Rs 69,221 crore as Nifty reached new highs.
February saw AI-related concerns affecting IT stocks, yet DIIs remained optimistic, purchasing Rs 38,423 crore worth of shares. The geopolitical tension in March, following the Iran-US conflict, led to a significant market downturn. Despite the Nifty dropping 11%, DIIs made their largest monthly purchase of Rs 1.36 lakh crore.
“Valuations are closer to long-term averages, particularly within large-cap stocks, while earnings growth is expected to accelerate in the second half of FY27.”
Dhiraj Relli, MD and CEO of HDFC Securities
The subsequent months continued to be volatile due to ongoing Middle East tensions. However, DIIs maintained their purchasing momentum, acquiring Rs 51,064 crore in April and Rs 82,669 crore in May. This consistent buying trend reflects DIIs' confidence in the Indian market's long-term potential.
Dhiraj Relli, MD and CEO of HDFC Securities, noted that the Nifty is trading at a discount to its long-term average, suggesting potential for growth. Vikas Khemani of Carnelian Asset Management emphasized India's structural re-rating as an opportunity rather than a risk.
“It is a moment to recognize that India's structural re-rating is in front of us, not behind us.”
Vikas Khemani, Founder of Carnelian Asset Management
Background
Historically, DIIs have been a stabilizing force in the Indian markets, especially during periods of global uncertainty. Their continued investments indicate a strong belief in the domestic market's resilience and growth prospects.
Looking ahead, analysts expect the Nifty to recover, with Nomura projecting a rise to 25,900 by March 2027. Factors such as easing geopolitical tensions, lower oil prices, and a robust AI theme are expected to drive this recovery.
