Foreign institutional investors (FIIs) ended their 12-month selling streak of Indian equities last week, marking their first net buying in two months as easing West Asia tensions and lower oil prices revived appetite for the market. According to latest exchange data, FIIs purchased equities worth ₹31,442.87 crore and sold shares worth ₹26,583.80 crore on June 19, leading to net inflows of ₹4,859.07 crore - their highest single-day net buying since February 3, when they had recorded provisional net purchases of about ₹5,236 crore. This represents a significant shift from the previous provisional buying of around ₹5,236 crore on February 3, demonstrating the scale of the recent investment activity. The latest data reveals this reversal was characterized by a distinct, alternate-day rhythm — with FIIs ramping up exposure on Monday, Wednesday, and Friday, culminating in an explosive surge heavily catalysed by passive fund realignments during the FTSE quarterly rebalancing.
In a notable shift from the previous session, domestic institutional investors (DIIs) emerged as net sellers on Friday, booking profits after providing strong market support throughout the week. According to exchange data, DIIs were net sellers to the tune of ₹1,159.64 crore on Friday, with domestic institutions buying shares worth ₹18,020.49 crore but selling equities worth ₹19,180.13 crore. However, the week as a whole showed a different picture, with DIIs reinforcing their role as the market's resilient bedrock with net buy of ₹7,109 crore over the week. As per Pabitro Mukherjee, Deputy Vice President-Research at Bajaj Broking, "Interestingly, DIIs sustained a relentless buying streak across every single trading session before tactically stepping back on Friday to absorb the influx of global capital." The latest data shows this marks the end of a long buying streak by domestic investors, who had been the dominant buyers in recent weeks.
Despite the strong foreign buying, Indian equities ended lower on Friday as benchmark indices recovered from deeper losses but remained in the red. The Nifty started the week on a positive note and rallied to intra-week high of 24,189 on Thursday session, but some profit booking on Friday's session saw the index give up some of its weekly gains and close the week at 24,013 levels up by 1.7 per cent. The Sensex fell 607 points to close at 76,803, weighed down by IT stocks and financial heavyweights. The market weakness occurred despite the significant foreign investment activity, highlighting the impact of sector-specific selling pressure on overall market performance. The latest reports indicate that the IT crash has particularly impacted domestic investor sentiment, contributing to the shift in DII behavior from buyers to sellers on Friday.
Domestic institutional investors remained the dominant buyers in the week ended June 19, with cumulative net purchases of ₹7,107.89 crore. According to exchange data, DII support was particularly strong on June 15 and June 18, when they infused ₹3,189.26 crore and ₹3,516.81 crore respectively. Foreign portfolio investors saw a volatile week marked by alternating bouts of buying and selling, with FIIs ending the week with net inflows of ₹3,386.33 crore, largely driven by the strong ₹4,859.07 crore purchase on June 19. The latest data shows this represents the highest single-day inflow in over four months for foreign investors. Broader market outperformed with Nifty Midcap and small cap index closing higher by 2.9 per cent and 3.2 per cent respectively, supported by optimism surrounding the US-Iran peace deal, decline in crude oil prices below the $80 mark, and sharp recovery in the Indian Rupee.
The FII shift marks a notable improvement in overseas investor sentiment after an extended period of sustained selling and offers a constructive signal for domestic equities. According to Ponmudi R, CEO of Enrich Money, "Consistent domestic buying helped offset periods of market volatility and provided a strong foundation for the recent recovery in equities. Together with the return of positive FII flows, the strength of institutional participation suggests improving confidence in the market and should continue to support sentiment in the near term." The improvement comes amid easing geopolitical risks, moderating commodity prices, resilient domestic institutional participation, and improving global sentiment. As per Ravi Singh, Chief Research Officer from Master Capital Services, "The recent improvement in sentiment can largely be attributed to easing geopolitical tensions in the Middle East, particularly after signs of progress in the U.S.-Iran peace discussions. This has resulted in a cooling of crude oil prices, which is a positive development for India as lower oil prices help ease inflation concerns and support the country's economic outlook." The shift also follows steps by India to attract foreign capital, including scrapping taxes on certain debt investments and easing ownership restrictions, which have helped stabilise the rupee, while foreign investors bought $1.5 billion of sovereign bonds last week, according to Central Depository Services India data.
