FII Vs DII: Why India Needs Foreign & Domestic Flows For The Next Market Rally

The ongoing battle between Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) remains crucial for India’s stock market. Harendra Kumar, MD – Institutional Equities, Elara Capital, believes India needs both foreign and domestic capital to support economic and GDP growth. While strong SIP inflows have helped absorb foreign selling, domestic flows alone may not be enough to drive a sustained market rally. Incremental FII and DII flows are also being absorbed through OFS transactions and private equity exits rather than directly lifting secondary-market stocks. A stronger combination of FII and DII flows could provide the market with greater momentum and support sector rotation.