Did DII Investments in India Exceed Rs 5 Lakh Crore for the Second Year in a Row?
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Synopsis
In a remarkable feat, domestic institutional investors have once again surpassed the Rs 5 lakh crore mark in 2025, showcasing their significant role in the Indian equity market. This trend comes amid notable foreign outflows and market fluctuations. Explore how these developments impact the economy and investor sentiment.
Key Takeaways
- DIIs have invested over Rs 5 lakh crore in 2025.
- Foreign institutional investors have withdrawn significantly.
- Market indices have shown mixed performance.
- Strong domestic flows contrast with declines in smallcap indices.
- Upcoming GST reforms may boost growth.
Mumbai, Sep 1 (NationPress) Domestic institutional investors (DIIs) have invested more than Rs 5 lakh crore into Indian equities this year, underscoring their growing role in stabilizing the market amidst foreign outflows.
According to provisional data from the NSE, mutual funds, banks, insurers, and other local institutions have net purchased Rs 5.13 lakh crore in equities so far in 2025, following a record Rs 5.25 lakh crore in 2024.
While domestic buying is on the rise, foreign institutional investors (FIIs) have been in a persistent selling phase, withdrawing over Rs 1.6 lakh crore from the secondary market this year, following a pullout of nearly Rs 1.21 lakh crore in 2024, according to NSDL data.
Despite recent fluctuations on Dalal Street, the counter-buying by DIIs in reaction to considerable selling by FPIs has surpassed previous episodes, including the 2008 Global Financial Crisis and the 2022 sell-off, a report from ICICI Securities noted.
DII inflows have effectively mitigated the selling pressure from FIIs, significant promoter offloads, and profit-booking by private equity funds.
However, robust domestic flows have not translated into widespread gains, as indices across all market capitalizations have exhibited flat to negative performance in the last year.
As of now, after a tumultuous 2025, the Sensex is up 1.96 percent year-to-date, while the Nifty has increased by 3.28 percent. In contrast, the BSE MidCap index has fallen by over 3.8 percent, and the BSE smallcap index has decreased by more than 6.7 percent.
Analysts indicate that India's Q1 GDP growth at 7.8 percent has exceeded expectations.
Both the fiscal stimulus from the budget and the monetary stimulus from the MPC are expected to show effects over time. Proposed GST reforms could further accelerate growth in the coming quarters, they suggest.
This, along with substantial liquidity flowing into mutual funds, is likely to continue supporting the market.
Year-to-date DII inflows in 2025 have reached 2.2 percent of the average Nifty market capitalization, marking the highest level since 2007.
Point of View
It's crucial to recognize the resilience shown by domestic institutional investors in the face of foreign selling pressures. Their consistent inflows reflect a solid belief in the underlying strength of the Indian market. Yet, the overall market performance remains mixed, indicating a cautious approach is still warranted.
NationPress
01/09/2025
Frequently Asked Questions
What are domestic institutional investors?
Domestic institutional investors (DIIs) are entities like mutual funds, banks, and insurance companies that invest in the domestic equity market.
How much have DIIs invested in 2025?
DIIs have invested over Rs 5 lakh crore in Indian equities so far in 2025.
What impact do DIIs have on the market?
DIIs play a crucial role in stabilizing the market, especially during periods of significant foreign selling.
What is the current performance of Indian indices?
The Sensex is up 1.96 percent YTD, while the Nifty has increased by 3.28 percent; however, the MidCap and smallcap indices have shown declines.
What factors are influencing the market?
Factors include DII inflows, foreign institutional investor behavior, and upcoming GST reforms, which could accelerate growth.
