DII inflows hit record high over past 12 months, double of FII outflows

FII selling has been outpaced by DII buying over the past 12 months.

Domestic institutional investors have kept their inflows into the markets steady, even as Dalal Street grapples with volatility and uncertainty. In a note, ICICI Securities stated that over the trailing 12 months, total DII inflows in the secondary market stood at a record high of $80 billion, which is twice that of foreign portfolio investor (FPI) outflows ($40 billion).

The magnitude of counter-buying by DIIs against heavy FPI selling far surpasses previous
episodes, including the Global Financial Crisis of 2008 and the sell-off seen in 2022.

Despite the strong domestic support to Dalal Street, the bouts of aggressive FPI selling in recent months have capped returns. Indices across market-capitalisations have delivered flat to negative performance over the past 12 months period. According to the brokerage, this reflects the drag from sustained foreign withdrawals, even as domestic investors absorbed the supply.

ICICI Securities noted that before the FPI exodus began in July 2025, foreign investors were net buyers across market-capitalisations in the first quarter of FY26. Alongside DIIs, FIIs had accumulated shares while the equity supply came from promoters, individual investors (barring small caps), and foreign direct investors.

Monthly data highlights the choppiness: while April to June saw consistent FPI inflows ranging from $1.2 to 2.3 billion, July reversed the trend with outflows of $2.9 billion, followed by further selling in August.

In July 2025, while FPIs pulled out $2.9 billion from India, Taiwan ($18.3 billion), Japan ($16.1 billion), and South Korea ($4.5 billion) attracted strong inflows. By August, trends turned mixed as India saw further outflows, along with South Korea ($591 million), while Japan continued to gain with $12.5 billion and Indonesia drew $515 million.

A major driver of resilient domestic flows has been the steady rise in Systematic Investment Plan (SIP) contributions to mutual fund equity schemes. As Indian households increasingly diversify their savings away from traditional instruments and towards equities, the structural expansion of SIP inflows has strengthened the domestic liquidity base.

Also Read | India-focused funds see highest redemptions since January as FPI outflows pick up pace

Follow our market blog to catch all the live updates

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.