Foreign institutional investors (FIIs) made a significant exit from Indian equities in the first week of September, offloading a net ₹5,667 crore. This marks a continued trend of foreign withdrawal from the market, driven by a complex mix of macroeconomic concerns and sentiment shifts. Domestic institutional investors (DIIs), however, have stepped in to buoy the markets amidst this selling pressure.NewsBytes
FII Selling Accelerates into September
According to stock exchange data, FIIs consistently sold equities throughout all five trading days of the first week of September. The total net outflow reached ₹5,667 crore, with ₹1,305 crore in net sales recorded on Friday alone.
DIIs Cushion the Market
Amid the continued foreign selling, DIIs have played a stabilizing role. In the same period, DIIs net bought ₹13,444 crore, including over ₹4,050 crore in purchases on Thursday and Friday alone. This domestic buying has helped support market stability despite persistent FII pressure.
FII Trends: From August Sell-Off to September Exit
The September exodus builds on a massive selling streak by FIIs in August, when they liquidated equities worth ₹46,903 crore, reaching a 13-year low in FII holdings in Indian stocks. DIIs absorbed investments worth ₹94,829 crore in that month alone. A similar pattern played out in July, with FIIs offloading ₹47,667 crore while DIIs stepped in with ₹60,939 crore in net purchases.NewsBytes
Why It Matters: Market Sentiment Under Strain
These consistent FII outflows raise red flags about investor sentiment. Global uncertainties, concerns over earnings growth, and shifting risk appetites are likely contributing factors. However, strong domestic buying suggests confidence in India’s long-term economic fundamentals, showing that DIIs are counterbalancing the selling pressure at this juncture.
What’s Next: Will FIIs Return—or Will DIIs Remain the Anchor?
The coming weeks may prove pivotal. Market watchers will closely monitor whether FII selling continues, slows, or reverses. At the same time, DIIs’ ability to sustain their buying momentum will be crucial in preventing sharper market downturns. Given the scale of FII withdrawal, maintaining stability may depend on robust domestic investor participation.
