FII & DII trends in March 2026

Foreign Institutional Investors (FII), which were countered by a strong performance of Domestic Institutional Investors (DIIs), who were pumping substantial capital and acting as a crucial counterbalance to stabilise the market. Here, we take a look at the FII & DII data for March 2026 and factors driving these flows.FII & DII activity in March 2026As per the cash segment, FII & DII trading activity data of March 2026, gross purchases made by FIIs were Rs. 278,800.39 crore and gross sales were Rs. 401,340.80 crore with a net outflow of Rs. 122,540.41 crore. On the other hand, DIIs' gross purchase was Rs. 414,657.07 crore and a gross sale of Rs. 271,696.70 crore, thus bringing in an inflow of Rs. 142,960.37 crore in March 2026, which helped absorb the selling pressure and cushion the market's decline.This dynamic highlights an ongoing structural shift in the Indian financial markets, with domestic capital increasingly reducing its reliance on foreign investment.Why were FIIs selling in March 2026?The triggers behind March's historic FII exodus were multiple, and largely global in origin. The primary trigger behind this massive sell-off was a dramatic rise in geopolitical tensions, i.e., the US-Iran conflict and the consequent disruption in the Strait of Hormuz. This triggered a global risk-off move, with investors pulling out of emerging markets like India into safe-haven investments. The price of Brent crude rose above $100 per barrel, and this posed a significant threat to India's macroeconomic stability.This was further aggravated by the currency factor. A depreciating Indian rupee was a crucial factor in increasing the FPI sell-off in March. By the end of March, the rupee had depreciated to approximately Rs. 94.29 against the US dollar. To foreign investors, who calculate returns in dollar terms, a depreciating rupee will devalue their Indian investments, thus driving their outflows.Rising US bond yields and a stronger US dollar made dollar-denominated assets more attractive, drawing funds away from emerging markets like India. The hawkish stance of the US Fed, coupled with continued inflation, also pressured FIIs to move funds to safer US assets.Goldman Sachs revised its economic forecasts on India, lowering the 2026 growth forecast of the GDP to 5.9% and raising the inflation forecast to 4.6%. This triggered a risk-off trade, with investors pulling out of India.The relatively low returns from India in the past eighteen months, as compared to other emerging and developed nations, was also one reason why FIIs outflowed from India. The FIIs were selling even in other emerging markets like Taiwan and South Korea.Margin squeeze in certain sectors, along with delayed earnings growth owing to high fuel costs and supply disruptions, were some factors that caused worry.Along with this, the unclear policy measures addressing the depreciating rupee and capital gains tax calculation for foreign investors also made FIIs reluctant toward investing in Indian equities. All these factors in combination led to FIIs' outflows in March 2026, but it was contained by the support of DII.Why were DIIs buying in March 2026?As foreign investments began to outflow the Indian market, domestic players remained optimistic about the Indian structural growth story, supported by an estimated growth rate of 7%+ GDP and policy reforms.Moreover, SIP inflows also continued to add to the domestic liquidity. The SIP inflows remained robust, crossing the mark of Rs 30,000 crore monthly. These sustained inflows of domestic funds assisted in absorbing the high selling pressure of FPIs without a market crash.The DIIs remained in their counter-cyclical position, which offered a cushion against FII selling, thus limiting extreme volatility in indices like Nifty and Sensex. ConclusionMarch 2026's FII net outflow of Rs. 122,540.41 crore. versus DII net inflow of approximately Rs. 142,960.37 crore is the most dramatic tug-of-war between foreign and domestic capital in India's market history. The record FIIs outflows were primarily induced by geopolitical turbulence, along with several other factors, which tested the foundations of India's domestic investment ecosystem like never before.The steady SIP inflows, the increasing mutual fund involvement, and the increasing confidence of the Indian institutional investors in the domestic fundamentals all helped to avert the market collapse. March 2026 has established that the Indian markets are no longer only dependent on foreign sentiment. The DIIs are now taking the lead and reducing the reliance of the Indian market on foreign investors.

FII & DII trends in March 2026

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