DIIs invest Rs 58,000 crore in eight sessions as markets slide on West Asia tensions

Indian equity markets have declined sharply since February 24

• DIIs invested over Rs 58000 crore during recent market correction
• Sensex and Nifty drop 4%; FIIs sell $1 billion in shares
• DIIs now play a stabilising role amid strong SIP inflows

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After a slowdown in investment earlier in February, domestic institutional investors  (DIIs) -- including mutual funds, insurers, banks and pension systems -- stepped in aggressively during the recent market correction, investing over Rs 58000 crore in Indian equities over the past eight trading sessions as selling pressure intensified amid escalating geopolitical tensions in the Middle East.

Indian equity markets have declined sharply since February 24. The benchmark Sensex and Nifty have each fallen about 5 percent during this period, while broader markets have also weakened. The BSE 150 MidCap index declined 3.4 percent and the BSE 250 SmallCap index dropped 4.1 percent. FIIs also turned sellers, offloading shares worth over $1 billion during the same period.

The buying was particularly strong on days of sharp market declines. On February 24, when the Sensex and Nifty fell 1.3 percent, DIIs bought equities worth Rs 3,160 crore. On February 25 and 26, when markets remained largely flat, DIIs purchased Rs 5,119 crore and Rs 5,031 crore, respectively.  Buying intensified during subsequent market corrections. On February 27, March 2, and March 4, when both the Sensex and Nifty declined by nearly 1.2 percent, 1.3 percent, and 1.4 percent, DIIs bought equities worth Rs 12,300 crore, Rs 8,600 crore, and Rs 12,000 crore, respectively. On March 5, when Indian markets rebounded, DIIs purchased equities worth over Rs 5,154 crore. The buying continued on March 6, when markets corrected again, with DIIs investing more than Rs 6,971 crore in Indian equities.

The strong buying came after a relatively slower investment pace earlier in the month. Between February 1 and February 23, DIIs invested about Rs 14000 crore in equities, compared with nearly Rs 70000 crore in January, according to NSE provisional data.

Vinod Nair, Head of Research at Geojit Investments, said DIIs were holding a reasonable amount of cash due to the modest investment pace last month. The recent market correction, driven by the impact of the war and the resulting global and domestic selloff, pushed markets into oversold territory, creating an attractive opportunity for long-term deployment of funds as SIP inflows remain strong.

With these purchases, DII investments in Indian equities have crossed Rs 1 lakh crore so far in 2026, achieved in about 39 trading sessions. In comparison, DIIs had crossed their first Rs 1 lakh crore investment mark in 2025 within 31 trading sessions. For the full year 2026, DIIs invested about Rs 7.75 lakh crore in Indian equities, significantly higher than the Rs 5.23 lakh crore invested in 2024.

Akshat Garg, Head – Research and Product at Choice Wealth, said the aggressive buying by domestic mutual funds during the recent correction highlights the structural strength of India’s domestic liquidity cycle. With steady SIP inflows and continued retail participation, mutual funds now have the flexibility to deploy capital during market declines rather than chase momentum during rallies.

This behaviour indicates growing maturity in the market, where corrections are increasingly viewed as opportunities to accumulate quality businesses at better valuations. Going ahead, as long as SIP inflows remain strong and India’s earnings growth trajectory remains intact, domestic institutions are likely to continue playing a stabilising role. This structural shift suggests that corrections may increasingly be met with incremental domestic buying rather than prolonged market dislocations, Garg added.