FIIs Show Early Signs of Stability in Indian Markets; DIIs Continue to Anchor Sentiment

New Delhi: After a prolonged phase of outflows, foreign institutional investors (FIIs) are beginning to show early signs of stabilisation in Indian equities, offering some relief to market sentiment.

FIIs emerged as net buyers in the final three trading sessions of the week, helping support a market recovery. However, on a cumulative basis, their flows remained slightly negative at around ?250 crore, indicating that consistent inflows will be necessary to confirm a sustained trend reversal, analysts noted.

On the domestic front, domestic institutional investors (DIIs) recorded outflows of approximately ?6,300 crore during the same period. Despite this, their broader role as a stabilising force in the market remains intact, continuing to provide structural support amid volatility.

The Indian rupee also showed strength this week, trading at 93.24, up 0.15 per cent. This appreciation was supported by a softer US dollar index, which hovered near 98, as easing geopolitical tensions—particularly around US–Iran de-escalation talks—reduced demand for safe-haven assets like the dollar.

According to Jateen Trivedi, improving sentiment, along with expectations of potential India–US trade discussions, is aiding capital inflows into domestic markets.

Adding to the positive momentum, crude oil prices have cooled over the past couple of days, easing pressure on India’s import bill and further supporting the rupee. Global oil markets reacted sharply after Iran signalled that the Strait of Hormuz would remain open for commercial shipping during a ceasefire period, reducing fears of supply disruptions in a critical energy corridor.

Analysts caution, however, that while the near-term outlook for the rupee and equities appears supportive, sustainability will depend on geopolitical developments and stability in crude prices.

Looking ahead, markets are expected to remain largely news-driven in the coming week, albeit with a positive bias. Investor focus will remain on the progress of US–Iran negotiations and their potential impact on global financial conditions.

With inputs from IANS