Domestic institutional investors (DIIs) have crossed the Rs 5 lakh crore mark in net equity investments for the third consecutive calendar year underlining their growing role in supporting Indian markets amid fluctuating foreign capital flows.

DIIs -- comprising banks, domestic financial institutions (DFIs), insurance companies, pension funds and mutual funds -- made a net investment of Rs 5.13 lakh crore in equities till August 7, according to stock exchange data.

However, during the corresponding period in CY25, they had invested Rs 4.48 lakh crore.

In the full calendar year 2025, DIIs infused a net Rs 7.88 lakh crore into Indian equities, while they recorded net inflows of Rs 5.26 lakh crore in CY24, according to BSE data.

Over the last 36 months since August 2023, DIIs have pumped Rs 19.21 lakh crore into Indian equities. In contrast, foreign portfolio investors (FPIs) sold Indian stocks worth nearly Rs 10 lakh crore during the same period.

Market experts attributed the sustained domestic inflows to the resilience of the Indian economy and strong participation by retail investors through mutual funds, despite geopolitical tensions in West Asia.

GST collections have remained healthy over the last few months and there have been no major negative surprises on the economic front despite the West Asia conflict, according to them.

They further noted that flows into equity and balanced mutual fund schemes have been robust, providing significant deployable capital for the markets. Overall, DII flows are expected to remain strong in the coming months.

Analysts also pointed to easing geopolitical risks, moderating energy prices, improving corporate earnings and a meaningful correction in valuations from CY24 peaks as factors that have improved the risk-reward profile for Indian equities.

With foreign institutional investor (FII) flows turning positive after four months of aggressive selling, analysts expect market sentiment toward Indian equities to remain largely constructive.

Sector-wise, DIIs were overweight on consumer stocks, public sector banks, energy, telecom, metals and technology companies within the Nifty 500 during the June 2026 quarter.

While they remained underweight on private banks, non-banking financial companies (NBFCs), capital goods, chemicals, real estate, healthcare and automobile stocks.