One of the most influential factors in the Indian stock markets is the institutional investment flows, especially of the Foreign Institutional Investors (FII) and Domestic Institutional Investors (DII). The activities of FIIs and DIIs offer valuable insight into the risk appetite of the world as well as India-specific investment sentiment. Here, we take a look at the FII & DII data for February 2026 and factors driving these flows.FII & DII activity in February 2026As per FII & DII trading activity data of February 2026, gross purchases made by FIIs were Rs. 339,315.95 crore and gross sales were Rs. 345,956.73 crore with a net outflow of Rs. 6640.78 crore.DIIs, on the other hand, had a gross purchase of Rs. 346,722.22 crore and a gross sale of Rs. 308,299.11 crore, thus bringing in an inflow of Rs. 38,423.11 crore in the month of February 2026.Here is a detailed overview: FII Rs CroresDII Rs CroresSegmentGross PurchaseGross SalesNet Purchase / SalesGross PurchaseGross SalesNet Purchase / SalesCash339,315.95345,956.73-6,640.78346,722.22308,299.1138,423.11F&O Index103,592.9898,916.274,676.7141,104,879.0041,150,927.58-46,048.58F&O Stock887943.01890131.47-2188.46692802.66697153.93-4351.27 This divergence is reminiscent of the historical patterns where the foreign capital is cautious, and the domestic institutions have a counter-cyclical role.Why are FIIs selling in February 2026?FIIs selling in February were driven by global uncertainties, including higher US bond yields and the dollar, which led to lower returns in emerging markets such as India. The hawkish US Fed stance, coupled with continued inflation, also played its role in further adding pressure, leading FIIs to withdraw their funds from India to safer US assets.Geopolitical tensions, such as the US-India trade tensions and the current US-Israel-Iran war, also added to the weak sentiments of the Indian IT and services sectors. Amid rising concerns about rapid advances in generative artificial intelligence, FIIs sold over Rs 10,956 crore in IT stocks in the initial days of February.NSE daily snapshots revealed growing sell-offs towards the end of the month, with offloading by FIIs of over ₹7,536.36 crore on February 27. This led to supply pressure, and there was increased volatility in Nifty and Sensex, but it was contained by the support of DII. Why DIIs are buying in February 2026DIIs, led by mutual funds such as SBI MF, HDFC MF and LIC, displayed a strong belief in India's growth story with net purchases in Indian markets. Steady SIP inflows were driving this domestic liquidity, which was a reflection of domestic investors' faith in 7%+ GDP growth projections for FY26.On FII selling, DII purchases created a buffer, and that provided a counterbalance in the Indian markets. On 27th February, as per NSE data, DIIs net buying was Rs. 12,292.81 crore, by which they absorbed FII sales and stabilised indices. This also highlights the structural shifts in the Indian markets, where demat accounts and SIPs are reducing the reliance of the Indian market on foreign investors.DII's move was an outcome of their optimism on corporate earnings recovery and the infra push through Budget 2026 allocations.The bottom lineFebruary 2026 FII net outflow of Rs. 6640.78 crore vs DII net inflow of Rs. 38423.11 crore is a classic tug of war between FIIs and DIIs. While FIIs did make opportunistic purchases on selected days, global headwinds and cyclical uncertainties led to their overall outflow.While domestic investors were playing the role of market stabilisers, they registered healthy net buying flows. DIIs made use of fiscal tail winds, domestic growth stories, SIP inflows and technical dip opportunities to pile up on equities.This divergence with outflows by FIIs and its impact absorbed by DIIs buying is indicating a changing Indian market structure where domestic capital is increasingly reducing Indian markets' dependence on FIIs' participation.
