DII buying in India surpasses Rs 5 lakh crore mark for 2nd consecutive year

Mumbai: Domestic institutional investors (DIIs) have poured over Rs 5 lakh crore in Indian equities (year to date), highlighting their increasing influence in stabilising markets amid foreign outflows.

Provisional NSE data indicates that mutual funds, banks, insurers, and other domestic institutions net purchased Rs 5.13 lakh crore in equities so far in 2025, following a record Rs 5.25 lakh crore worth of purchases in 2024.

Domestic buying has increased while foreign institutional investors (FIIs) entered a relentless selling phase, withdrawing over Rs 1.6 lakh crore from the secondary market this year, following a pullout of nearly Rs 1.21 lakh crore in 2024, according to NSDL data.

Despite recent volatility on the Dalal Street, the counter-buying by DIIs in response to significant selling by FPIs is greater than in past instances, including the 2008 Global Financial Crisis and the 2022 sell-off, a report from ICICI Securities said.

DII inflows helped absorb selling pressure from FIIs, significant promoter offloads and profit-booking by private equity funds.

Strong domestic flows, however, have not led to widespread gains. Indices across all market capitalisations have shown flat to negative performance over the past 12 months.

After a volatile year in 2025, the Sensex stood 1.96 per cent up YTD, as the Nifty advanced by 3.28 per cent. In contrast, the BSE MidCap index had declined over 3.8 per cent, while the BSE smallcap index dropped over 6.7 per cent.

According to analysts, domestically, India’s Q1 GDP growth number at 7.8 per cent came much better than expected.

Both the budget’s fiscal stimulus and the MPC’s monetary stimulus are acting with a lag. The proposed GST reforms can accelerate growth in the coming quarters, they added.

This, along with the huge liquidity coming into mutual funds, will continue to support the market.

DII inflows (YTD) in 2025 reached 2.2 per cent of the average Nifty market capitalisation, marking the highest level since 2007.

IANS