Domestic institutional investors (DIIs) have poured more than Rs 5 lakh crore into Indian equities so far in 2025, underscoring their growing clout in cushioning markets against foreign outflows. With four months still left in the year, this is the second successive year that DIIs have breached the milestone.
Provisional NSE data shows that mutual funds, banks, insurers and other domestic institutions have net purchased Rs 5.13 lakh crore worth of equities in 2025, after a record Rs 5.25 lakh crore in 2024. This comes on the back of Rs 1.81 lakh crore in 2023, followed by Rs 2.76 lakh crore in subsequent purchases that year.
The surge in domestic buying has coincided with relentless selling by foreign institutional investors (FIIs), who have withdrawn over Rs 1.6 lakh crore from the secondary market this year after pulling out nearly Rs 1.21 lakh crore in 2024, according to NSDL data.
Market watchers note that DII inflows have been instrumental in absorbing this selling pressure, even amid heavy promoter offloads and profit-booking by private equity funds.
Yet, robust domestic flows have not translated into broad-based gains. A Bloomberg note highlighted that only 30 percent of BSE500 companies have delivered positive returns over the past year, while 70 percent ended lower — a reminder that liquidity alone cannot guarantee market breadth.
Indian equities have remained volatile in 2025, with the Sensex up 2.1 percent and the Nifty ahead by 3.1 percent, even as the BSE MidCap index fell 3.9 percent and the SmallCap index slipped 6.8 percent.
Analysts, however, remain optimistic on the structural shift underway. Independent market expert Ajay Bagga said domestic participation in equities is rising steadily as higher incomes and growing investment appetite set off a self-reinforcing cycle.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, added that the market’s resilience at current levels is largely due to DII flows, which represent a longer-term trend of household savings transitioning into equity investments.
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