Analysts see bright FY26 with strong DII support and renewed FPI interest

By

Ruchita Sonawane

, ET BureauLast Updated: Jul 01, 2025, 05:26:00 AM IST

Synopsis

In the first half of 2025, domestic institutional investors aggressively bought Indian equities, exceeding ₹3.5 lakh crore, while foreign portfolio investors remained net sellers at ₹1.2 lakh crore. A turnaround occurred in March due to easing interest rates and government tax incentives. Analysts anticipate continued foreign inflows and domestic investment, projecting a positive outlook for FY26.

Mumbai: Domestic institutional investors (DII) have intensified buying in the equity market in the first six months of 2025 compared with the corresponding period in the previous year whereas their overseas counterparts (FPIs) continued to be net sellers during both periods. DIIs have bought shares worth over ₹3.5 lakh crore so far in 2025 compared with ₹2.4 lakh worth of purchase in the first six months of 2024. FIIs on the other hand were net sellers of ₹1.2 lakh crore worth of Indian equities in each of the periods.

In January and February, foreign investors remained aggressive sellers in Indian equities close to ₹1.5 lakh crore until the tide turned in March amid easing interest rate cycle and tax boost by the government in the Union Budget that renewed buying interest in the market.

Agencies

Analysts said steady and gradual foreign inflows are likely in the next few months as India is attractively placed within emerging markets due to improved market conditions while domestic investors are expected to continue pumping in money into the markets. The trajectory for FY26 is now expected to be better given that the government and RBI are both pro-growth and the earnings concern is already priced in which is a positive signal for both foreign and domestic investors," said Neeraj Chadawar at Axis Securities.

In June, both foreign and domestic investors remained buyers worth ₹7,488.98 crore and ₹72,673.9 crore, respectively, driving benchmark Nifty 3.1% higher in the month.

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