Mumbai: Indian equity markets received strong support from domestic institutional investors (DIIs) in July, helping cushion the impact of foreign selling. At the same time, foreign institutional investor (FII) outflows dropped sharply, pointing to a gradual improvement in overseas sentiment.
According to provisional exchange data, FIIs sold shares worth ₹5,780 crore in July, the smallest monthly outflow recorded so far in 2026.
Selling Pressure Continues To Ease
The decline marks a significant improvement from earlier months.
Net FII outflows stood at ₹1.22 lakh crore in March, before easing to ₹70,140 crore in April, ₹55,960 crore in May and ₹49,030 crore in June. Analysts say the trend suggests overseas investors are becoming more comfortable with India’s economic and corporate outlook.
Pabitro Mukherjee, Deputy Vice President – Research at Bajaj Broking, said July witnessed the slowest pace of foreign selling this year after heavy outflows during the first half of 2026.
Foreign Investors Return As Buyers
Investor sentiment improved further during the final week of July.
FIIs turned net buyers in several trading sessions, purchasing shares worth ₹5,950 crore during the week. The shift reflects improving confidence in Indian equities as earnings remain healthy and domestic fundamentals stay supportive.
DII Buying Remains A Strong Pillar
Domestic institutional investors continued to provide consistent support throughout the year.
DIIs invested ₹35,100 crore in July and bought shares worth ₹5,390 crore during the final week of the month. Their steady participation has helped absorb foreign selling and maintain stability in the market.
What Investors Will Watch Next
According to Ventura’s Head of Research, Vinit Bolinjkar, the Nifty 50 ended the week at 24,366, supported by improving capital flows and strong blue-chip buying.
However, investors will continue monitoring crude oil prices, the US-Iran geopolitical situation and the rupee’s movement against the US dollar. While imported inflation risks remain, analysts believe improving liquidity, healthy corporate earnings and sustained institutional participation continue to support the near-term outlook for Indian equities.
