Foreign institutional investors (FIIs) remained net sellers for the week ended 4 July, offloading a net ₹4,000 crore in Indian equities, according to provisional exchange data. Domestic institutional investors (DIIs), however, stepped in as strong counterweights, purchasing ₹12,630 crore during the same period.

Weekly and Monthly Flow Snapshot

The divergence between foreign and domestic flows has been a defining feature of recent market sessions. During June, FIIs sold a cumulative ₹49,030 crore, while DIIs absorbed the pressure with purchases worth ₹85,800 crore, based on provisional exchange data. This sustained DII counterbalance has helped benchmark indices hold their ground despite persistent foreign selling.

For the current week, FIIs were net sellers in four out of five sessions, with Friday being the lone exception. DIIs were net buyers for four sessions as well, also stepping back on Friday, according to Pabitro Mukherjee, Deputy Vice President – Research at Bajaj Broking.

Benchmark Indices Post Fourth Straight Weekly Gain

Despite the FII outflows, benchmark indices extended gains for the fourth consecutive week, buoyed by strong global cues and a sharp decline in crude oil prices. Brent crude has fallen to levels not seen since the start of the US-Israel war on Iran, easing energy cost pressures and supporting broader risk sentiment, Mukherjee noted.

The Indian rupee also strengthened, trading around 22 paise firmer at 95.20 against the US dollar, supported by a Dollar Index sliding below 100.50 and easing FII selling pressure in recent sessions.

Key Factors Shaping the Outlook

Looking ahead, institutional flows are expected to remain sensitive to a range of domestic and global developments, according to analysts. The progress of the monsoon season will be closely tracked, given its direct implications for rural demand, agricultural output, and inflation trends.

The upcoming Q1FY27 corporate earnings season will also be a critical inflection point, offering fresh insights into the health of corporate India and the sustainability of earnings growth. Analysts caution that downward revisions to earnings growth estimates remain a live risk.

Global Cues: Crude and US-Iran Talks in Focus

On the global front, movements in crude oil prices and developments in the US-Iran peace talks will remain key variables, as they directly influence inflation expectations, energy costs, and risk appetite. A sustained fall in crude would be broadly positive for India, an economy that imports a significant share of its energy needs.

While multiple risks persist — including monsoon-linked inflation concerns and continued FII caution — market watchers suggest that much of the visible uncertainty appears to be priced in, leaving room for a constructive interpretation of incremental positives. The trajectory of FII flows in the coming weeks will likely hinge on how these domestic and global variables evolve.