FIIs net sell equities worth ₹17,140 crore in a week; DIIs cushion markets with ₹9,780 crore buying

Indian equity benchmarks Sensex and Nifty 50 ended the week in the red, marking their first significant weekly decline in April. The downturn was driven by a sharp sell-off in IT stocks and escalating geopolitical tensions in the Middle East. The fall intensified in the latter half of the week, with markets snapping a three-day winning streak on Wednesday and extending losses through Friday, as stalled US–Iran talks and crude oil crossing $100 per barrel kept sentiment under pressure.

Snapping a two-week winning streak, both benchmark indices declined nearly 2% each. A spike in Brent crude prices, a weakening rupee, and rising uncertainty in West Asia—including concerns around the Strait of Hormuz, weighed on investor sentiment and dampened risk appetite. Persistent selling by foreign investors further added to the pressure.

Sectorally, IT stocks emerged as the biggest laggards, dragged down by weak earnings and cautious forward guidance. In contrast, defensive and domestic-focused sectors such as FMCG, pharma, and power saw buying interest, as investors rotated towards relatively stable segments amid heightened volatility.

FIIs’ sell-off continues

Foreign institutional investors (FIIs) extended their selling streak last week, even as domestic institutional investors (DIIs) stepped in to cushion the market from sharper declines.

According to provisional exchange data, FIIs were net sellers to the tune of ₹17,140 crore during the week ended April 25. In contrast, DIIs remained steady buyers, investing ₹9,780 crore over the same period, helping stabilise markets amid rising global uncertainties.

The month-to-date trend has remained unchanged for the tenth consecutive month, with FIIs pulling out a substantial ₹56,360 crore from Indian equities so far in April. DIIs, on the other hand, have infused ₹39,480 crore during the same period, partially offsetting foreign outflows.

Pabitro Mukherjee, Associate Vice President – Research at Bajaj Broking, attributed the sustained FII selling largely to global macroeconomic and geopolitical concerns. Uncertainty around developments in West Asia continues to weigh on investor sentiment. FIIs remained net sellers across all five trading sessions last week, with the pace of selling accelerating in the second half, he noted.

“Geopolitical developments continue to dominate institutional flows, with Donald Trump extending the U.S.–Iran ceasefire until Tehran presents a unified proposal to end the conflict with the U.S. and Israel. While this has temporarily eased escalation fears, it is likely to keep uncertainty elevated over a longer period,” Mukherjee said.

Despite persistent outflows, DII support -- driven by mutual funds, insurance companies, and other domestic investors -- has played a crucial role in preventing deeper corrections. Their consistent buying reflects strong domestic liquidity and long-term confidence in Indian equities.

Going ahead, institutional activity is expected to remain closely tied to global developments, particularly progress in US-Iran negotiations, given their implications for geopolitical stability and global energy markets.

Key trigger for market next week

Vinod Nair, Head of Research at Geojit Investments, said a mix of global and domestic headwinds, including geopolitical tensions in West Asia and a weakening rupee, has led to persistent FII outflows amid rising U.S. bond yields.

On the domestic front, he noted that early signs of an economic slowdown flagged by the Reserve Bank of India, softer forward-looking business confidence, and downgrades by foreign brokerages on India’s equity outlook have overshadowed an otherwise expansionary PMI reading.

Looking ahead, Nair said the coming week features a dense macroeconomic calendar that will be critical in shaping near-term market direction. The rate decision and commentary from the Federal Reserve will be key, as a hawkish stance could prolong pressure on emerging markets via a stronger dollar and continued FII outflows. Meanwhile, the policy decision by the Bank of Japan adds another layer of sensitivity around global liquidity conditions.

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