DII

In 2025, domestic institutional investors (DIIs) recorded unprecedented inflows, while foreign institutional investors (FIIs) faced historic outflows. Will FIIs return, or will DIIs continue to dominate in 2026?

Foreign portfolio investors sold ₹22,130 worth of Indian stocks in December 2025, contributing to a total outflow of ₹1,58,407 crore for the year. Meanwhile, domestic institutional remain invested, supporting the market amid declining FPI sentiment.

FPIs have continued to sell Indian stocks in December, withdrawing over ₹17,800 crore amid a weak rupee and heightened risks. However, strong domestic investor activity has helped mitigate the impact, allowing market indices to reach new highs.

In December, FPIs sold ₹17,955 crore in Indian equities, but DIIs purchased ₹36,101 crore, countering the impact. The rupee's decline and US trade tariffs are prompting FPI withdrawals. Despite volatility, earnings growth prospects remain promising for the Indian market.

By end-CY25, markets should have found a clearer direction, backed by earnings acceleration, supportive macros and policy continuity, says Nandish Shah of Motilal Oswal.

DIIs bought equities worth ₹5.13 lakh crore in the past eight months, as per the NSE data, achieving 97% of the full-year inflow of ₹5.26 lakh crore recorded in 2024 and nearly tripling the ₹1.81 lakh crore inflow seen in 2023.

Generally, the market still perceives that the tariff-related disruptions are temporary. However, the lack of strong interaction between the parties is increasing the uncertainty, adding confusion to the market.

So far in 2025, FPI selling has crossed ₹1.60 lakh crore, bringing their shareholding in Indian equities to a 15-year low. Analysts believe the recent tariff hike is unlikely to significantly accelerate outflows, as much of the downside is already priced in.

FIIs have pulled out a massive ₹1.16 lakh crore from Indian equities so far in 2025, signaling a strong risk-averse sentiment among global investors.