While foreign institutional investors (FIIs) remained sellers this week, with net outflows of Rs 31,114 crore, domestic institutional investors (DIIs) continued to absorb the supply, investing Rs 33,933 crore during the same period, as the government and the RBI introduced several measures to attract foreign capital.
The ability of DIIs to offset FII selling has been one of the primary reasons why Indian markets have avoided a deeper correction despite global uncertainties, according to market watchers.
FIIs remained net seller in all the five-trading session during the week, while DIIs remained net buyer in all the five-trading session.
FII ownership as a percentage of total Indian equities has fallen from 20.2 per cent in May 2016 to 14.4 per cent in May 2026, Meanwhile, DII ownership as a percentage of total Indian equities has risen over the years, reaching 18.7 per cent in March 2026, said analysts.
Benchmark indices traded in a range with a corrective bias during the week, as escalating geopolitical tensions dimmed hopes of a near-term US–Iran deal.
Concerns over Iran’s nuclear ambitions, Strait of Hormuz, persistent FII outflows and elevated oil prices weighed on sentiment.
The RBI maintained a status quo by holding the repo rate steady at 5.25 per cent.
“Simultaneously, investor confidence was significantly boosted by the government’s decision to exempt Foreign Institutional Investors (FIIs) from capital gains tax on interest earned from government securities,” said Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking.
Nifty started the week on a soft note and formed an intra-week low of 23,151 on Wednesday session. However, index recovered marginally in the second half of the week to close around 23350 levels down by 0.8 per cent.
Investor sentiment remained subdued amid ongoing geopolitical tensions, which continued to support elevated crude oil prices.
Going into the new week, the sustainability of domestic inflows and any signs of moderation in FII selling will be critical factors to watch, said analysts.
