Amid war-led turbulence, DIIs infuse ₹1 lakh crore in just 14 sessions; FIIs pull out ₹90,000 crore

Even as foreign investors beat a hasty retreat, domestic capital is quietly taking centre stage on Dalal Street, cushioning volatility in the equity market. Over the past 14 trading sessions alone, domestic institutional investors (DIIs) have infused more than ₹1 lakh crore into the equity cash market, offsetting relentless selling by foreign institutional investors (FIIs), who have withdrawn around ₹89,000 crore during the same period.

The pace of domestic buying has picked up sharply. So far in 2026, DIIs have infused ₹2.03 lakh crore into equities, as per NSDL data. Interestingly, while it took them 39 sessions to invest the first ₹1 lakh crore, the next ₹1 lakh crore came in just 14 sessions, largely during the recent bout of volatility, the data showed.

Notably, the Sensex and Nifty have declined nearly 12% over the same period, pressured by geopolitical tensions, persistent rupee depreciation, and concerns over the impact of elevated crude prices on India’s growth and corporate earnings.

FIIs remain relentless sellers

FIIs, on the other hand, have remained consistent sellers. They have pulled out nearly ₹1.3 lakh crore so far this year, with selling intensifying after tensions escalated in West Asia. Since February 27, when the U.S.-Israel-Iran conflict picked up, FIIs have sold nearly ₹89,000 crore in just 14 sessions, and have been net sellers every single day during this stretch, according to NSDL data.

In January this year, FIIs sold equities worth ₹41,435 crore in January and another ₹6,640 crore in February, amid concerns over valuations of Indian equities as compared to other emerging market peers.

A similar pattern played out last year as well. In 2025, FIIs were net sellers to the tune of over ₹3 lakh crore, but that was more than offset by record DII inflows of ₹7.89 lakh crore.

Shift in market dynamics

Market experts say this divergence between domestic and foreign flows has now become a defining feature of Indian equities. “Foreign investors, rattled by a stronger dollar and geopolitical uncertainty, have been consistent net sellers. Domestic institutions—mutual funds, insurance companies, and pension funds—have been equally consistent on the other side of that trade,” says Abhinav Tiwari, Research Analyst at Bonanza.

The sustainability of this trend hinges on continued retail participation through mutual funds and SIPs, which have remained resilient so far, he added.

Nitin Aggarwal, Director of Investment Research and Advisory at Client Associates, believes these domestic flows are helping stabilise the market, even if they cannot fully offset global pressures. “The divergence between DII buying and FII selling is supporting valuations and providing a steady source of demand. However, markets have still seen pressure, indicating that while domestic flows can cushion the downside, they cannot completely negate broader risk-off sentiment,” he says.

Echoing a similar view, Krishna Rao, MD & Co-Head – Equity Broking Group at JM Financial Services, notes that DIIs have effectively acted as a “shock absorber” in recent months. “Even with heavy FII selling, DIIs have often bought two to three times the amount sold by foreign investors. This is not just tactical buying—it is backed by steady SIP inflows, which have scaled up to around ₹30,000–31,000 crore per month, creating a predictable and sticky source of liquidity,” he explains.

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