DIIs Cushion Markets as FIIs Sell, Indices Jump Over 5% on Ceasefire Optimism

New Delhi: Indian equity markets staged a strong rebound this week, rising over 5%, as robust buying by domestic institutional investors (DIIs) countered heavy selling by foreign institutional investors (FIIs). Improved global sentiment—triggered by a reported ceasefire understanding between the US and Iran—also boosted investor confidence.

According to exchange data, FIIs offloaded equities worth ?20,710 crore during the week. In contrast, DIIs stepped in with net purchases of ?21,602 crore, stabilizing the markets and supporting the rally.

Market experts attribute the sustained FII selling to multiple global and macroeconomic pressures, including geopolitical uncertainty, elevated crude oil prices, weakness in the rupee, rising global bond yields, and persistent inflation concerns.

However, there was a slight shift toward the end of the week. FIIs recorded a net inflow of ?672 crore on Friday—their first positive session since February 25. Analysts caution that one day of buying is not enough to confirm a trend reversal, and consistent inflows will be needed to signal renewed foreign interest.

Looking at broader monthly trends, FIIs have pulled out ?38,973 crore from Indian equities so far, while DIIs have invested ?35,983 crore, continuing to act as a stabilizing force.

Retail participation also remains strong. Monthly contributions through Systematic Investment Plans (SIPs) reached a record ?32,087 crore in March, reflecting sustained confidence among individual investors.

The improvement in sentiment came after Donald Trump announced a two-week truce with Iran, easing geopolitical tensions. This development led to a softening of crude oil prices and increased risk appetite among investors globally.

Benchmark indices ended the week on a positive note for the second consecutive time. The Nifty 50 surged 5.89% over the week, closing at 24,050, while the BSE Sensex gained 5.77% to settle at 77,550.

The banking sector led the rally, with the Bank Nifty outperforming broader markets. It rose 1.99% on Friday and posted a sharp weekly gain of 8.47%, closing at 55,912.

Going forward, market direction will largely depend on further developments in US-Iran relations, crude oil price movements, and upcoming corporate earnings, which will determine whether the current momentum can be sustained.

With inputs from IANS