Foreign vs Indian investors: who really moves the Nifty now?
Indian institutions now buy far more shares than foreign investors sell, and they own more of the market. But month to month, the Nifty still tends to move with foreign money.
Domestic institutions bought a record ₹7.88 lakh crore of Indian shares in 2025 and now own more of NSE-listed companies than foreign investors do. A simple look at the money flows, the ownership shift, and a test of whether foreign selling still drags the Nifty down.
Two big groups of professional investors buy and sell Indian shares.
FPIs, or foreign portfolio investors, are funds and other investors from outside India: pension funds, mutual funds, hedge funds and so on. They put money into Indian shares and can take it out quickly.
DIIs, or domestic institutional investors, are large Indian organisations that invest money. The biggest are mutual funds, which collect money from many people and invest it for them. The others are insurance companies such as LIC, banks, and pension funds.1
For years, the common view was simple: when foreigners sell, the market falls. Since 2021, Indian institutions have been buying on a scale India has not seen before. So I wanted to check whether that view still holds.
Who is buying and who is selling
“Net buying” means the money a group spent buying shares minus the money it got from selling them. If the number is negative, the group sold more than it bought.
- Domestic institutions (DIIs)
- Foreign investors (FPIs)
2026 is January to September only. Negative means net selling.Source: NSE Market Pulse, October 2026 (FPI data from NSDL)
From 2015 to 2021, the two groups were of similar size. Foreign investors bought more in some years and Indian institutions in others.
Then the gap opened. In 2024, foreign investors bought and sold almost exactly the same amount, ending with net buying of just ₹427 crore. Domestic institutions bought ₹5.27 lakh crore. In 2025, foreign investors sold ₹1.66 lakh crore, and domestic institutions bought a record ₹7.88 lakh crore.2
In rupee terms, 2026 is already the heaviest year of foreign selling in NSDL’s records, which go back to 2002. From January to 23 October, foreign investors sold ₹3.08 lakh crore of Indian shares, according to NSDL, the depository that tracks their trades.3 Domestic institutions bought ₹6.40 lakh crore in just the first nine months.2
Who owns the market now
Flows are money moving in a month or a year. Ownership is the result of all those flows added up over time, plus price changes. The NSE tracks what share of all NSE-listed companies, by value, each group owns.
- Foreign investors (FPIs)
- Domestic institutions (DIIs)
- Individuals, directly
At the end of March each year, plus June 2026. Domestic institutions are mutual funds, banks, insurers and other Indian institutions.Source: NSE India Inc. Ownership Tracker, in NSE Market Pulse, August 2026
In March 2015, foreign investors owned 22.0% of NSE-listed companies, about twice the 10.4% owned by Indian institutions. By June 2026, the order had flipped: Indian institutions owned 19.5% and foreign investors 15.1%.4 That foreign share is the lowest in 69 quarters. The gap between the two, 4.4 percentage points, is the widest since NSE’s records begin in 2001.
Part of the jump in 2023 came from banks, financial institutions and insurers, whose combined share rose from 4.5% to 6.1% in a single year. Most of the steady rise since then has come from mutual funds, which owned a record 11.6% of NSE-listed companies in June 2026.4
When exactly did Indian institutions pull ahead? The first reports put it in the quarter (three months) to March 2025. Prime Database, which tracks shareholdings, reported 17.62% for Indian institutions against 17.22% for foreign investors, the first time in its records going back to 2009. NSE’s own tracker reported the same quarter and called it the first time since 2003.5 NSE’s later, revised figures move the crossover one quarter earlier, to December 2024. Either way, Indian institutions have stayed ahead in every quarter since.
The test: does foreign money still move the Nifty?
The Nifty 50 is an index that tracks the share prices of 50 large Indian companies. If foreign money still drives the market, months of heavy foreign selling should mostly be months when the Nifty fell.
I took NSDL’s monthly foreign flows into Indian shares and the Nifty 50’s closing level at the end of each month, from January 2015 to September 2026.6 I then compared two periods. The first is 2015 to 2019, before domestic buying became so large. The second is January 2021 to September 2026. I left out 2020 because the Covid crash in March 2020, when the Nifty fell 23% in one month, would swamp everything else.
I used one simple statistic, the correlation. It runs from -1 to 1. A value near 1 means two things tend to rise and fall together. A value near 0 means there is no pattern.
| 2015 to 2019 | 2021 to Sep 2026 | |
|---|---|---|
| Months | 60 | 69 |
| Months when FPIs were net sellers | 24 | 37 |
| …and the Nifty still rose | 6 | 13 |
| Heavy-selling months (more than 0.1% of the market’s value) | 6 | 12 |
| …and the Nifty still rose | 0 | 3 |
| Average Nifty move in heavy-selling months | -3.9% | -1.6% |
| Correlation of FPI flows with Nifty returns | 0.54 | 0.55 |
Two things stand out.
First, the basic link has not weakened. In both periods the correlation is about 0.55. Foreign selling months were still mostly falling months, and foreign buying months were mostly rising months. In both periods, flows and the Nifty moved in the same direction about three months out of four.
Second, heavy selling now hurts less often. Before 2020, all six months of heavy foreign selling were down months for the Nifty, with an average fall of 3.9%. Since 2021, the Nifty still rose in 3 of 12 such months, and the average fall was 1.6%. A rupee of foreign money also moves the market less than it used to, but that is mostly because the market is about 2.7 times bigger than it was in 2019. Once I adjust for that, the effect of each month’s foreign flow on the Nifty looks about the same in both periods.7
This test has clear limits:
- Correlation is not causation. Foreign investors may sell because prices are falling, not the other way round. A month of bad news can push both flows and prices down at once.
- The samples are small. Six and twelve heavy-selling months are not enough to be sure of the difference.
- Monthly data is rough. Plenty happens inside a month, such as interest rates, oil prices and company earnings, that this simple test does not capture.
Two big tests: October 2024 and March 2026
October 2024. Foreign investors sold ₹94,017 crore of Indian shares, a monthly record at the time in NSDL’s data. Domestic institutions bought a record ₹1.1 lakh crore. The Nifty still fell 6.2%. NSE pointed out that in March 2020, foreign selling was smaller, yet the Nifty fell about four times as much.8
The selling went on. From October 2024 to February 2025, foreign investors sold a net ₹2.13 lakh crore. Domestic institutions bought roughly ₹3.4 lakh crore over the same five months. The Nifty still fell 14.3%, from 25,811 at the end of September 2024 to 22,125 at the end of February 2025.9
March 2026. Foreign investors broke the record, selling ₹1.18 lakh crore in one month. NSE links that month to the escalating conflict in West Asia and pressure on the rupee and oil prices. Domestic institutions bought ₹1.43 lakh crore, which NSE calls their largest single month of buying since FY2008. The Nifty fell 11.3% in the month.10
Over the first nine months of 2026, domestic institutions bought more than twice what foreigners sold. The Nifty still ended September 13.4% below where it started the year.2
This can look strange. If Indian institutions bought more than foreigners sold, why did prices fall? Because these two groups are not the only traders. Individuals, companies and promoters (the founders and owners of listed companies) also buy and sell, so the two numbers do not have to cancel out. And prices depend on how eager buyers and sellers are on each day, not on monthly totals.
Where SIP money fits
A large part of domestic institutional buying is mutual fund buying, and a steady part of mutual fund money comes from SIPs, or systematic investment plans. A SIP puts a fixed amount into a mutual fund every month. In September 2026, SIPs brought in a record ₹32,490 crore. That month, mutual funds bought about ₹53,200 crore of the ₹76,030 crore that domestic institutions put into shares.11 I wrote about how this monthly machine works in The SIP machine.
What this means
On ownership, Indian investors now hold more of their own market than foreign investors do, and the gap is the widest NSE has recorded. On prices, foreign money still matters month to month. The simplest honest answer to “who moves the Nifty” is: both, and neither alone. Domestic buying acts like a cushion under the market. It has not replaced foreign money as the force that sets its direction.
Footnotes
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NSE’s ownership tracker counts domestic mutual funds, insurance companies, banks and other domestic institutions as DIIs. NSE, Market Pulse, August 2026, Story of the Month, note 4. ↩
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NSE, Market Pulse, October 2026, table “Category-wise net inflows into Indian equities”, calendar years 2014 to 2026 (2026 as of 30 September). FPI figures come from NSDL and include money invested through IPOs. DII figures are trades on the exchanges, classified by the client category that brokers report. The chart shows these figures in lakh crore, rounded to two decimals. Nifty 2026 move from Nifty Indices historical data: 26,129.60 on 31 December 2025 to 22,620.45 on 30 September 2026 (my arithmetic). “More than twice” compares ₹6.40 lakh crore with ₹2.60 lakh crore. ↩ ↩2 ↩3
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NSDL, FPI Monitor, calendar-year report, equity column, 2026 total up to 23 October 2026: minus ₹3,08,358 crore. The comparison is my reading of NSDL’s calendar-year totals for 2002 to 2025. The largest earlier yearly outflow was minus ₹1,66,286 crore in 2025; before 2022, the largest was minus ₹52,987 crore in 2008. ↩
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NSE India Inc. Ownership Tracker, June 2026 edition, in NSE Market Pulse, August 2026, Table 2 (share of total market value of NSE-listed companies, end of March each year and June 2026). The DII line is my arithmetic: domestic mutual funds plus banks, financial institutions and insurance plus other institutions. For June 2026 it gives 19.5%, the same as NSE’s published figure. Summing rounded numbers can be off by 0.1 point in other years. ↩ ↩2
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Prime Database, as reported by Business Standard, 2 May 2025. NSE, India Ownership Tracker, March 2025. The December 2024 date comes from NSE’s August 2026 Market Pulse, which says DII ownership exceeded FPI ownership “for the seventh consecutive quarter” in June 2026; counting back seven quarters gives December 2024. ↩
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Monthly foreign flows: NSDL calendar-year reports, equity column, January 2015 to September 2026. Nifty 50 month-end closes: Nifty Indices historical data. Monthly returns, counts and correlations are my arithmetic. A heavy-selling month is one where net FPI selling was more than 0.1% of the total value of NSE-listed companies at the previous end of March (June 2026 for July to September 2026), using market values from NSE’s ownership tracker. “Same direction” means FPIs were net buyers and the Nifty rose, or net sellers and the Nifty fell: 45 of 60 months in 2015 to 2019 and 50 of 69 months in 2021 to 2026. ↩
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My arithmetic, using a simple straight-line fit. In 2015 to 2019, each ₹10,000 crore of net FPI flow went with a Nifty move of about 1.7%; in 2021 to 2026, about 0.6%. Measured as a share of the market’s value instead, net flows of 0.1% of the market went with a Nifty move of about 1.9% in the first period and 1.8% in the second. The 2.7 times is NSE-listed market value at the end of March 2026 (₹408.6 lakh crore) compared with March 2019 (₹149.7 lakh crore), from NSE’s ownership tracker, Table 1. ↩
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NSDL calendar-year report for 2024: October 2024 equity flow of minus ₹94,017 crore. NSE, Market Pulse, November 2024: record DII net buying of ₹1.1 lakh crore in October 2024, the Nifty’s 6.2% fall, and the comparison with March 2020 (October’s fall was about a quarter of March 2020’s, though FPI outflows in dollars were 34% higher). ↩
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Foreign selling is my sum of NSDL’s monthly equity figures for October 2024 to February 2025 (minus ₹94,017, minus ₹21,612, plus ₹15,446, minus ₹78,027 and minus ₹34,574 crore). Domestic buying is my arithmetic from NSE figures: about ₹1.1 lakh crore in October 2024 (Market Pulse, November 2024); ₹78,678 crore in November and December 2024 (the 2024 total of ₹5,27,438 crore minus ₹4,48,760 crore to 31 October 2024); and ₹1,51,445 crore in January and February 2025 (Market Pulse, March 2025). NSE revises these figures slightly between editions, so treat the total as approximate. Nifty closes from Nifty Indices. ↩
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NSDL calendar-year report for 2026: March 2026 equity flow of minus ₹1,17,775 crore. NSE, Market Pulse, April 2026: DII net buying of ₹1,42,960 crore in March 2026, “the largest single-month DII purchase since FY08”, and the link to the West Asia conflict, the rupee and oil. Nifty fall from Nifty Indices: 25,178.65 on 27 February 2026 to 22,331.40 on 30 March 2026, the last trading day of the month (my arithmetic). ↩
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NSE, Market Pulse, October 2026: SIP contributions of ₹32,490 crore in September 2026, domestic mutual funds’ equity buying of ₹53.2 thousand crore, and DII net buying of ₹76,030 crore in the month. ↩