DIIs pump record ₹3.60 lakh crore into Indian stock market in H1 2025
Domestic institutional investors (DIIs), which largely comprise mutual funds, have pumped record inflows into the Indian stock market in the first half of 2025, continuing to acquire local equities at a rapid pace amid robust retail investor participation.
They bought Indian equities worth ₹3.57 lakh crore in H1 2025, marking the strongest-ever half-yearly inflows, achieving 68% of the full-year inflow of ₹5.26 lakh crore recorded in 2024, and nearly double the ₹1.81 lakh crore inflow seen in 2023.
DIIs began the year by aggressively acquiring shares worth ₹86,591 crore in January, followed by another ₹64,853 crore in February. While inflows softened over the next two months, they picked up pace again in May and June, with ₹67,642 crore and ₹72,673 crore, respectively, largely driven by a surge in block deals.
As DIIs continue to expand their portfolios, foreign portfolio investors (FPIs) remained net sellers, pulling out ₹1.3 lakh crore from the Indian stock market in the first half of 2025.
Though they turned net buyers over the last three months, the aggressive selling during the first quarter of 2025 more than offset the recent inflows, keeping their overall stance negative for the year so far.
However, the impact on the market has been limited, with both the Nifty 50 and Sensex gaining over 7% during the same period.
The robust DII inflows not only cushioned the impact of FPI outflows but also led to a significant shift in institutional holdings across India Inc. DII ownership in the March 2025 quarter rose by 160 basis points year-on-year (YoY) to an all-time high of 19.2%, up from 17.6% in March 2024. In contrast, FII ownership fell by 40 basis points YoY to an all-time low of 18.8%, down from 19.2% in March 2024.
Robust retail activity set to drive continued surge in DII inflows
Retail investors have been actively shifting their savings from traditional bank deposits to equities in recent years, aiming to participate in India’s growth story, with the majority opting for the mutual fund route to gain ownership in listed companies.
This participation has not only broadened the investor base but also provided a strong foundation for the market, encouraging many companies to raise funds through the stock market to capitalize on ongoing domestic demand. This process has expanded the overall size of the Indian stock market, which recently surpassed Hong Kong to become the fourth largest globally.
At times, the steady inflows have even forced fund managers to pause or slow down SIP investments, as they found themselves running out of viable allocation opportunities.
In May, the assets under management (AUM) of mutual funds crossed ₹70 lakh crore for the first time (as per AMFI), which is 31% of the total deposit base of Indian banks ( ₹227.4 lakh crore).
According to market experts, DII inflows into the Indian stock market are expected to remain strong through the rest of 2025, as mutual fund investments continue to gain momentum with India emerging as a bright spot in the global economy.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
