Foreign institutional investors (FIIs) have remained aggressive sellers in Indian equities in May, extending their cautious stance amid heightened global uncertainty triggered by the West Asia crisis and a sharp spike in crude oil prices. On the other hand, domestic institutional investors (DIIs) continued to lend strong support to the market through sustained buying.

FIIs have pulled out ₹21,469 crore from the cash market in the first seven sessions of May 2026, according to NSDL data. In contrast, DIIs have infused ₹35,323 crore into equities during the same period, helping cushion the impact of foreign outflows.

The data showed that selling pressure from foreign investors has intensified over the past three trading sessions. FIIs sold equities worth ₹1,959 crore on May 12, ₹8,438 crore on May 11, and ₹4,111 crore on May 8, taking the cumulative outflow over these three sessions to around ₹14,507 crore.

During the same period, DIIs remained net buyers, purchasing shares worth ₹7,990 crore on May 12, ₹5,940 crore on May 11, and ₹6,748 crore on May 8. Their cumulative buying over these three sessions stood at around ₹20,678 crore, significantly offsetting foreign selling pressure.

The Indian equity benchmarks have experienced a sharp downturn over the last three trading sessions amid persistent uncertainty over U.S.-Iran peace talks, a sharp spike in crude oil prices and continued selling by foreign institutional investors.

The benchmark indices - BSE Sensex and NIFTY 50 - have plunged more than 4% over the past three sessions, wiping out nearly ₹19 lakh crore in investor wealth. The total market capitalisation of BSE-listed companies fell to around ₹455.80 lakh crore from ₹474.65 lakh crore at the close of trade on May 7.

Sentiment weakened this week after Prime Minister Narendra Modi urged citizens to reduce consumption of petrol and diesel, gold, chemical fertilisers and edible oil, while also discouraging non-essential foreign travel to help ease pressure on the current account deficit amid elevated crude oil prices.

On a year-to-date (YTD) basis, the BSE Sensex has declined 12.5%, while the NIFTY 50 is down around 10.6%.

FIIs sell-off hit ₹2.6 lakh crore in CY26

So far in calendar year 2026, FIIs have remained net sellers in each of the first five months, offloading equities worth over ₹2.62 lakh crore. In January, they sold equities worth ₹41,435 crore, followed by ₹6,641 crore in February. Selling accelerated sharply in March, when they offloaded a record ₹1.23 lakh crore worth of shares amid the U.S.-Israel-Iran conflict, before moderating to ₹70,135 crore in April.

Meanwhile, DIIs have emerged as consistent buyers throughout the year, reflecting strong domestic liquidity flows through mutual funds, insurance companies, and pension funds. They have pumped nearly ₹3.37 lakh crore into Indian equities in 2026 so far, comfortably exceeding FII outflows and providing a crucial support base for the domestic market.

DIIs inflows stood at ₹69,221 crore in January, ₹38,423 crore in February, and surged to ₹1.43 lakh crore in March. They purchased shares worth ₹51,064 crore in April and another ₹35,323 crore so far in May.

According to market analysts, near-term market sentiment is likely to stay volatile due to crude and currency concerns, though any signs of geopolitical easing could support relief rallies, aided by resilient domestic fundamentals and stable institutional flows.