Domestic investors pour ₹5.3L crore into equities, surpassing 2024 record
What's the story
Domestic institutional investors (DIIs) have made a new record in Indian equities this year, surpassing last year's peak. So far in 2025, DIIs such as mutual funds, insurers, banks, and pension systems have net bought equities worth ₹5.3 lakh crore. The figure has already surpassed last year's total of ₹5.22 lakh crore with a quarter of the year still remaining.
Market dynamics
Mutual funds lead the charge
Mutual funds have been the biggest contributor to this record-breaking figure, accounting for ₹3.65 lakh crore. This surge is supported by monthly SIP flows exceeding ₹25,000 crore and high cash holdings of ₹1.98 lakh crore in August. Insurance companies and pension funds have also contributed over ₹1 lakh crore to this total, with PMSs, AIFs, banks, and others making up the rest.
Performance comparison
Indian equities lag behind globally
Despite the strong domestic flows, Indian equities have underperformed on the global stage. In dollar terms, Sensex has gained just 2% and Nifty 4% so far this year. This underperformance is attributed to weak earnings and stretched valuations. The sustainability of mutual fund inflows is now being questioned as equity fund inflows fell by 22% in August to ₹33,430 crore from July's record high of ₹42,702 crore.
Market challenges
Concerns over rising redemptions and external risks
Analysts have flagged rising redemptions from small-cap and thematic funds as investors book profits and divert money into real estate. They also warned that GST rationalization and festive spending could squeeze household savings, limiting fresh allocations to equities. External risks such as the US raising H-1B visa fees and revoking sanction waivers on Iran's Chabahar Port have also weighed on investor mood.
Investor behavior
FIIs continue to exit Indian markets
Foreign institutional investors (FIIs) have continued their selling spree, offloading ₹1.8 lakh crore so far in 2025 after a sale of ₹1.21 lakh crore last year. Their shareholding in Indian equities has fallen from 22% in 2019 to just 16% now. This trend coincides with India's 30-percentage-point underperformance against MSCI Emerging Markets—the steepest since 1996—further adding to the market's challenges.