Have Domestic Investors Really Bought a Record Rs 5.3 Lakh Crore in Equities in 2025?
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Synopsis
In an unprecedented move, domestic institutional investors have netted an astonishing Rs 5.3 lakh crore in equities in 2025, surpassing last year's total. Will this trend continue amidst market challenges? Dive into the latest insights and analysis on India's investment landscape.
Key Takeaways
- Domestic investors have net bought Rs 5.3 lakh crore in equities in 2025.
- Mutual funds are the primary drivers of this investment.
- Concerns arise regarding the sustainability of these inflows.
- Indian equities are lagging behind global market performance.
- Analysts predict a recovery in FPI sentiment due to corporate earnings growth.
New Delhi, Sep 22 (NationPress) With a quarter of 2025 still ahead, domestic institutional investors have remarkably net purchased a staggering Rs 5.3 lakh crore in equities, exceeding the total for the entire year of 2024, which stood at Rs 5.22 lakh crore, as per the stock exchange data.
The driving force behind this impressive surge has been mutual funds, which acquired Rs 3.65 lakh crore, supported by monthly SIP inflows surpassing Rs 25,000 crore. Their cash reserves were still high at Rs 1.98 lakh crore as of August.
Insurance companies and pension funds contributed over Rs 1 lakh crore, while other portions came from portfolio managers, alternative funds, banks, and additional institutions.
However, analysts are beginning to notice early signs of a slowdown, citing stagnation in market returns and global challenges affecting investor sentiment.
Even with strong inflows from domestic institutional investors, Indian equities have underperformed compared to international counterparts, with the Sensex up only 2 percent and the Nifty 4 percent in 2025 in dollar terms, in contrast to double-digit gains in significant Asian and Western markets.
Market observers express concerns about the sustainability of mutual fund inflows, despite equity fund inflows of Rs 33,430 crore in August and Rs 42,702 crore in July.
They are noting rising redemptions from small-cap and thematic funds as investors take profits and shift their investments into real estate. Additional GST rationalization and increased festive spending, such as home renovations, might pressure household savings, restraining new equity allocations as India’s consumption cycle accelerates.
Meanwhile, foreign institutional investors (FIIs) have been net sellers, offloading Rs 1,80,443 crore thus far in 2025, following a sale of Rs 1.21 lakh crore the previous year.
Despite this, FIIs have consistently engaged in buying through the primary market even as they sell through exchanges, acquiring Rs 1,559 crore in equities in September.
Given the lackluster earnings, inflated valuations, and uncertainty over US tariffs, analysts believe there is a strong potential for over 15 percent growth in corporate earnings for FY27, which could lead to a recovery in FPI sentiments.
Point of View
I emphasize that while domestic investors show remarkable resilience in their equity purchases, the emerging trends signal a cautious approach. It's essential to remain vigilant as market dynamics evolve, ensuring that we align our strategies with the larger economic landscape. We remain committed to bringing you the most accurate and timely insights.
NationPress
22/09/2025
Frequently Asked Questions
What is the total amount of equities bought by domestic investors in 2025?
Domestic investors have net purchased a record Rs 5.3 lakh crore in equities in 2025 to date.
Who are the main contributors to this buying spree?
Mutual funds are the largest contributors, purchasing Rs 3.65 lakh crore, along with insurance companies and pension funds adding over Rs 1 lakh crore.
How do current Indian equity returns compare with global markets?
The Sensex and Nifty have gained only 2% and 4% respectively in 2025, lagging behind major Asian and Western markets that have seen double-digit gains.
What trends are analysts noticing about mutual fund inflows?
Analysts are concerned about the sustainability of these inflows, particularly in light of rising redemptions from small-cap and thematic funds.
What is the outlook for FPI sentiments in the coming years?
Despite current challenges, analysts project a potential growth of over 15% in corporate earnings for FY27, which could positively influence FPI sentiments.
