FOR YEARS, foreign portfolio investors (FPIs) were the pacesetters for Indian equities. A single sell order from Singapore or New York would send shivers down D-Street. But the balance of power is shifting. Today, even as FPIs withdraw billions, the stock market is holding its ground, courtesy of an army of domestic investors who are rewriting the rules of the game with steady inflows.

Between FY22 and FY25, FPIs offloaded shares worth nearly ₹96,500 crore, turning net sellers in three of the past four years. Year-to-date (till August 22), they’ve sold another ₹1.96 lakh crore worth of shares, including ₹22,217 crore in August alone. Yet, the Nifty50 has gained more than 5% this year. Meanwhile, on strong macro indicators, expectations of GST rationalisation, and an upgrade in India’s sovereign credit rating by S&P, domestic institutional investors (DIIs) have pumped in ₹4.85 lakh crore so far this year.

Behind this domestic wave lies retail participation. “In the past four years, despite heavy FPI selling, the Nifty50 delivered absolute returns of 54%,” says Sunny Agrawal, head of fundamental equity research at SBI Securities. Ajit Mishra, SVP–research at Religare Broking, attributes this change in market dynamics to “the financialisation of household savings”.

As regulators tighten rules around speculative activities such as weekly F&O and online money games, an increasing percentage of household savings is being directed to mutual funds. “Monthly SIP inflows have crossed ₹25,000 crore, making them a sticky and reliable source of equity demand. Mutual funds are expanding deep into Tier II and III cities, while pension and insurance funds bring patient, long-duration capital that stabilises markets,” says Mishra.

The shift is visible in ownership data. The share of FPIs in NSE-listed companies dropped to 17.3% in Q1FY26, the lowest in nearly 13 and a half years. At the same time, domestic mutual funds infused ₹1.2 lakh crore into equities, marking the 17th straight quarter of positive flows. Their ownership hit record highs of 13% in the Nifty50, 11% in the Nifty 500, and 10.6% across all listed firms, reveals NSE’s latest ‘Market Pulse’ report.

Average monthly SIP inflows hit ₹26,863 crore in Q1FY26, up nearly 29% year-on-year. Non-promoter individual ownership in NSE-listed firms also rose to 9.6% in June, despite ₹13,136 crore of net outflows, says NSE data.

In July, according to the Association of Mutual Funds in India, equity mutual funds saw record inflows worth ₹42,702 crore, with SIP contributions hitting an all-time high of ₹28,464 crore and 91.1 million active accounts, highlighting the resilience of domestic participation.

The resilience is most visible in mid- and small-cap stocks, where retail investors have steadily raised their exposure. “Investors are maturing. They’re holding on through volatility and ignoring short-term noises,” says Agrawal.

Mishra terms it a “structural shift” reflective of India’s growth story. “Local participation is improving market resilience, though it has also driven valuations to a premium compared to peers.” No doubt, strong DII inflows, a robust SIP culture, and improved digital access have together reshaped the power dynamics on D-Street. Foreign money still matters, but it no longer dictates India’s equity narrative.

D-Street’s heartbeat, once synced to global flows, is increasingly beating to a local rhythm. And this time, it looks like the shift is here to stay.