For years, every market discussion in India has carried one recurring theme…. “Where are the FIIs headed?”
Financial media and investors alike have often read Foreign Institutional Investor (FII) flows as the holy signal for market direction. When FIIs buy, the market soars. When they sell, the market shakes.

But in today’s India, that narrative deserves a rethink.

Understanding the Flows

FII (Foreign Institutional Investors) and DII (Domestic Institutional Investors) represent two key sources of capital in Indian equities.

• FIIs bring foreign money….. large funds, global asset managers, hedge funds.

• DIIs represent domestic mutual funds, insurance companies, pension funds, and increasingly, retail-backed SIPs.

Traditionally, FIIs dominated — often accounting for over 60% of institutional activity on Dalal Street. Their inflows or exits could swing indices by hundreds of points.

The Changing Landscape

But India’s market structure has evolved dramatically over the past decade:

• Domestic SIPs now bring over ₹20,000 crore per month, creating a steady base of long-term investors.

• DII holdings have reached parity with FIIs …. a striking reversal from a decade ago.

• Retail participation is at record highs, with more than 15 crore demat accounts and an empowered investor class that invests systematically, not speculatively.

So when FIIs sell ₹30,000 crore worth of equities, the market doesn’t panic the way it once did ….. because domestic investors are stepping in with conviction and liquidity.

Why the FII Narrative Persists

Old habits die hard. FII data offers a simple, visible metric….easy to report and easy to sensationalize. But markets today are more complex and self-reliant.
Even when FIIs pulled out in 2022–23 amid global tightening, the Nifty and Sensex found support from domestic flows …. proving that India’s capital markets are no longer hostage to foreign sentiment.

A More Balanced View Forward

As investors, we need to evolve from tracking flows to understanding them.
FIIs may exit for reasons unrelated to India …. global risk aversion, currency positioning, or reallocation to other emerging markets. Meanwhile, DIIs and retail investors continue to reflect confidence in domestic fundamentals.

What We Believe

At ARKA Invest, we believe that while FII flows still influence sentiment, the real drivers of India’s bull run are structural and domestic:

• Strong earnings growth across manufacturing, BFSI, and new-age sectors.

• Fiscal discipline and infrastructure spending supporting long-term expansion.

• A digital and consumption-driven economy that attracts both foreign and domestic belief in India’s growth story.

India’s bull run is not being driven by FIIs anymore….. it’s being owned by Indians.

At ARKA Invest, our mission is to help investors cut through market myths, focus on data-led insights, and invest with clarity, not noise.