Domestic institutional investors (DII) have turned into the most reliable backstop for Dalal Street in 2026, net buying ₹4.16 lakh crore in just over five months while foreign investors have relentlessly offloaded Indian stocks.
📌 Key Takeaways
- DIIs have net purchased ₹4.16 lakh crore worth of Indian equities between January and early June 2026.
- FIIs have net sold ₹2.7 lakh crore in the same period, driven by oil price fears, AI disruption concerns, and geopolitical risk.
- March 2026 was the single largest month of DII buying, ₹1.36 lakh crore, coinciding with an 11% Nifty crash triggered by the Iran-US conflict.
- Monthly SIP inflows stood at ₹31,115 crore in April 2026, up 18% year-on-year despite slipping from March’s record of ₹32,087 crore.
- Nomura has raised its Nifty target to 25,900 by March 2027, citing expectations of conflict resolution and a strong AI investment theme.
The Scoreboard: DII Buying vs FII Selling in 2026
The divergence between domestic and foreign institutional investors has rarely been this stark. In just over five months of 2026, DIIs, which include mutual funds, insurance companies, pension funds, and corporate treasuries, have net purchased Indian equities worth ₹4.16 lakh crore. Foreign institutional investors, in contrast, have net sold shares worth ₹2.7 lakh crore over the same stretch.
As of early June 2026, DIIs have purchased ₹39,098 crore in equities this month alone. FIIs, meanwhile, have sold nearly ₹35,445 crore in the same period, continuing a pattern that has played out month after month.
| Month | DII Net Buy (₹ Cr) | FII Net Activity |
|---|---|---|
| January 2026 | 69,221 | Net Sellers |
| February 2026 | 38,423 | Net Sellers |
| March 2026 | 1,36,000 | Net Sales ~₹1.2 lakh crore |
| April 2026 | 51,064 | Net Sellers |
| May 2026 | 82,669 | Net Sellers |
| June 2026 (MTD) | 39,098 | Net Sold ~₹35,445 crore |
Data as of June 9, 2026. Source: NSE/BSE institutional flow data.
Month-by-Month: How 2026 Unfolded on Dalal Street
January: A Calm Before the Storm
Markets opened in 2026 on a strong footing. Nifty scaled fresh lifetime highs early in the month, and investor sentiment was upbeat. DIIs net bought ₹69,221 crore, which is solid but unremarkable given the optimism in the air.
February: The AI Disruption Scare
Sentiment turned sharply in February when new developments from AI labs, including advances from Anthropic, triggered fears of large-scale disruption in India’s technology sector. Heavyweight IT stocks saw a sharp correction as investors began pricing in the risk of AI-led displacement. Despite the sell-off, DIIs maintained their buying stance, netting ₹38,423 crore during the month.
March: War, Oil, and a Historic ₹1.36 Lakh Crore DII Defence
March 2026 delivered the most dramatic market event in recent memory. Over the last weekend of February, US and Israeli forces conducted targeted military strikes on Iran, killing Supreme Leader Ayatollah Ali Khamenei. What followed was a wave of retaliatory attacks across the Middle East, triggering a full-blown geopolitical crisis in the world’s most oil-dense region.
When markets reopened, the damage was severe. Nifty fell 11% over the month. Crude oil prices surged, bond yields spiked, the rupee weakened, and FIIs launched one of the most aggressive selling campaigns in recent history, offloading nearly ₹1.2 lakh crore worth of Indian equities in a single month.
DIIs absorbed the blow. They net bought ₹1,36,000 crore in March 2026, the highest single-month purchase figure of the year so far, effectively acting as a floor under the market.
April and May: Volatility Continues, DIIs Stay the Course
The subsequent months saw persistent uncertainty. US President Donald Trump issued repeated threats, ceasefires proved fragile, and diplomatic maneuvering kept investors on edge. Yet DIIs continued to step in. April saw net buying of ₹51,064 crore; May saw ₹82,669 crore, collectively holding up market depth even as foreign money continued to exit.
What Are DIIs Actually Seeing?
The scale and consistency of DII buying in 2026 raise a pointed question: what do domestic institutions see that foreign investors don’t?
Dhiraj Relli, MD and CEO of HDFC Securities, points to valuations. The Nifty is currently trading at roughly a 10% discount to its long-period average, an unusual condition for a market that typically commands a valuation premium.
“Valuations are closer to long-term averages, particularly within large-cap stocks, while earnings growth is expected to accelerate in the second half of FY27,” Relli said. “Any near-term volatility should be viewed as an opportunity to increase equity exposure. I continue to believe that the Nifty could hit a new all-time high later this year once uncertainty around the US-Iran conflict starts abating.”
Vikas Khemani, Founder of Carnelian Asset Management, frames it in structural terms. “This is not a moment to reduce India exposure; it is a moment to recognize that India’s structural re-rating is in front of us, not behind us.”
SIP Flows: Retail Muscle Remains Intact
One key pillar supporting DII buying power is the steady stream of mutual fund SIP inflows. Monthly SIP contributions stood at ₹31,115 crore in April 2026, down marginally from the all-time record of ₹32,087 crore set in March, but still 18% higher than the ₹26,400 crore recorded in April 2025.
This consistent retail participation gives mutual funds, the largest component of the DII universe, a dependable reservoir of fresh capital to deploy, irrespective of short-term market volatility.
📊 [Track live FII-DII flow data on NiftyTrader’s FII-DII Dashboard →]
Where Is the Market Headed? Nomura Raises Its Nifty Target
International brokerage Nomura has revised its Nifty target upward to 25,900 by March 2027, up from its earlier estimate of 24,900 for December 2026. The revision comes despite, or perhaps because of, the sharp correction triggered by the Iran-US conflict.
Nomura’s analysts note that Dalal Street has held up better during this crisis than it did during the Russia-Ukraine war in 2022. Nifty is down approximately 10% since the start of the Iran-US conflict, a smaller drawdown than what was recorded in 2022. Notably, broader markets, represented by Nifty Midcap and Smallcap indices, have posted positive returns during this same period.
Three drivers underpin Nomura’s optimism: an expected easing of West Asian hostilities that would reopen the Strait of Hormuz and bring crude prices down, a globally supportive AI investment theme, and accommodative central bank stances.
Bottom Line
DIIs have emerged as the defining force in Indian markets in 2026, absorbing over ₹4.16 lakh crore in equities even as foreign investors pulled out ₹2.7 lakh crore amid war, oil shocks, and AI fears.
The scale of domestic buying, backed by resilient SIP inflows and a valuation case that institutional managers find compelling, has limited the downside and kept Dalal Street from a deeper collapse.
Whether Nomura’s 25,900 Nifty target materialises will depend on how quickly the geopolitical fog clears, but the structural argument for India remains intact.
Read Next: How to Read an FII/DII Data Report (With Examples)
FAQs
What is DII net buying?
DII (Domestic Institutional Investor) net buying refers to the difference between total equity purchases and total sales by domestic institutions, including mutual funds, insurance companies, and pension funds, on Indian stock exchanges in a given period. A positive net figure means they bought more than they sold.
Why are FIIs selling Indian equities in 2026?
FIIs have cited multiple concerns: the spike in crude oil prices following the Iran-US conflict, rising global bond yields, fears of AI-driven disruption in India’s IT sector, and stretched valuations relative to other emerging markets.
How do SIP inflows affect DII buying?
Mutual funds, the largest DII category, receive fresh capital through monthly SIP contributions. This gives fund managers a steady pool of money to invest regardless of short-term market conditions, which is why DII buying tends to remain consistent even during market downturns.
What does Nifty trading at a 10% discount to its long-period average mean?
It means the current price-to-earnings or price-to-book multiple of the Nifty is approximately 10% below its historical average. For value-oriented investors, this signals that the market may be relatively cheap compared to its own history.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a SEBI-registered financial advisor before making any investment decisions.
