FIIs Sell Rs 1.15 Lakh Crore in 2025 – Are DIIs Buying Enough To Absorb Selling Pressure

Amid the unabated selling by foreign institutional investors (FIIs), the domestic equity market has been in pain for the previous five months, with the benchmark equity indices Sensex and Nifty falling 11.6 and 12.7 per cent, respectively.

On Wednesday, Friday 19, the 30-share BSE Sensex closed flat at 75,939.18, slightly lower by 28.21 points, or 0.04 per cent. Likewise, the NSE Nifty 50 closed at 22,932.90, marginally down by 12.4 points or 0.05 per cent.

The selling is deeper in the broader market, as Nifty Smallcap 100 and Nifty Midcap 100 have dropped over 21 per cent and 17 per cent, respectively.

So, if FIIs are selling relentlessly, are domestic institutional investors (DIIs) buying enough?

Are DIIs Filling The Gap Left By FII Outflows?

FIIs have sold Indian equities worth Rs 1.15 lakh crore so far in 2025, according to CDSL data. Till February 18, FIIs have offloaded equities worth Rs 28,334.7 crore, after taking out Rs 87,374.66 crore in January.

Meanwhile, DIIs have bought equities worth Rs 1.2 lakh crore on a year-to-date (YTD) basis. In February, DII buying exceeded FII outflows as their net investment stood at Rs 33,851.03 crore. In January, DIIs invested Rs 86,591.8, absorbing most of the selling pressure from FIIs in the month.

In the calendar year 2024, FIIs offloaded equities worth Rs 3.02 lakh crore. Against this, DIIs infused Rs 5.26 lakh crore, providing the much-needed support amid the current volatility.

FIIs have been net buyers in just three sessions in 2025 so far, while DIIs have been net buyers in 35 of the 36 sessions this year.

What Is Making DIIs Confident About Indian Equities?

CA Manish Mishra, founder of GenZCFO, explained that India’s strong economic fundamentals, rising corporate profits and stable GDP growth, are driving optimism among the DIIs. Unlike FIIs, DIIs such as mutual funds, insurance companies, and pension funds focus on long-term investments, which helps reduce concerns about short-term market volatility. He also highlighted that a rise in retail investments, especially through SIPs, is providing steady liquidity and reinforcing DIIs' confidence in the market.

Systematic Investment Plan (SIP) inflows stayed strong in January, 2025. Investors contributed Rs 26,400 crore, just below the Rs 26,459 crore recorded in December 2024, according to Association of Mutual Funds in India  (AMFI) data.

Satish Chandra Aluri of Lemonn Markets Desk said, “As of December, DIIs were estimated to be sitting on over Rs 1 lakh crore in cash reserves, ensuring liquidity to counter FII outflows. This steady influx of funds has cushioned the market impact, even amid record foreign investor selling.”

According to VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, “DIIs are investing because they are getting funds from investors. Their optimism stems from the hope that there will be a growth and earnings recovery in FY26.”

Why DIIs Are Buying While FIIs Are Selling?

Aluri also said, “Unlike DIIs, FIIs operate across multiple markets, making investment decisions based not just on Indian market valuations but also factors like currency fluctuations, global risk-reward dynamics, and geopolitical developments.”

Vijayakumar concurred, saying that FIIs have other opportunities to invest like in US, Europe and other emerging markets, while DIIs predominantly invest in India.

Adding to that, Mishra said, DIIs look beyond short-term valuations, focusing on India’s earnings potential and policy stability. FIIs worry about rupee depreciation, whereas DIIs, operating in INR, are unaffected by forex risks, Mishra added.