Indian individual investors have made a dramatic shift in their market stance, turning net sellers of Indian equities for the first time in six years during FY26. According to NSE's latest Market Pulse report, individual investors offloaded equities worth ₹5,803 crore on a net basis in the secondary market, marking a significant departure from their consistent buying pattern since FY20. Even after accounting for primary market issuances, their total investment declined to ₹36,805 crore, which is sharply lower than the ₹1.59 lakh crore recorded in FY25.
The shift occurred amid intense selling pressure from foreign institutional investors, who increased their selling intensity from ₹1.27 lakh crore in FY25 to ₹2.26 lakh crore in FY26. As reported by Upstox, domestic institutional investors absorbed this selling by purchasing equities worth ₹8.49 lakh crore, demonstrating their continued support for Indian markets. Recent trading data shows FIIs net sold ₹1,919 crore worth of equities on April 21, while DIIs net bought ₹2,221 crore shares, reflecting the ongoing tug-of-war between foreign and domestic investors. For the year so far, FIIs have been net sellers of ₹2.13 lakh crore worth of shares, while DIIs have net bought ₹2.74 lakh crore worth of shares, according to provisional exchange data.
The reversal in investor sentiment was driven by multiple factors including elevated market valuations that prompted profit booking and geopolitical uncertainty that dampened risk appetite. According to the NSE report, FY25 and FY26 witnessed significant economic policy changes, including hikes in LTCG and STCG taxes in the 2024-25 budget and increased securities transaction tax on derivatives in the latest budget. Additionally, a high-interest rate scenario made debt instruments more attractive compared to equity investments during these periods.
The preference shift was particularly evident in precious metals investments, with gold delivering 41.1% returns in FY25 and 47.9% in FY26, while silver outperformed with 135% returns in domestic markets. As reported by Upstox, silver ETFs saw their turnover jump 177 times in FY26, and gold ETFs saw their assets under management soar from ₹31,224 crore in FY24 to ₹1.71 lakh crore. This capital flight from equities to safe-haven assets highlighted investor concerns about market volatility and global uncertainties.
Despite the overall selling trend, individual investors maintained discipline in indirect equity investments through systematic investment plans. According to the report, cumulative SIP inflows scaled an all-time high of ₹3.5 lakh crore in FY26, with the number of SIP registrations rising by 7.2 crore, taking total SIP accounts to 10.5 crore. However, concerningly, 6.8 crore accounts also discontinued their SIPs in FY26, which represents a worrisome trend that could impact mutual fund investment patterns in coming quarters.
