FII vs DII: Who Is Moving the Market in 2026?

Foreign institutional investors (FIIs) and domestic institutional investors (DIIs) report their buying and selling every trading day, and on 15 September 2026 the FIIs sold shares worth a net Rs 2,978 crore in the cash market, after buying Rs 13,195 crore and selling Rs 16,173 crore during the day. The domestic institutional investors (DIIs) bought a net Rs 2,686 crore on the same day, so the domestic buying almost cancelled out the foreign selling. Many investors who follow the daily numbers are asking whether FIIs or DIIs are moving the market, and the figures of this session give one part of the answer.

In the 11 September session there was a similar pattern. According to provisional exchange data, the FIIs sold a net Rs 931 crore, while the DIIs bought a net Rs 1,968 crore.

Foreign Institutional Investors (FII) are foreign pension funds or asset managers that buy Indian shares. Domestic Institutional Investors (DII) are institutions within India such as mutual funds, insurance companies and banks, and they invest the savings coming out of Indian households.

For a long time, the daily FII figure was treated as the main signal for the market. When it turned negative, many individuals expected Nifty to fall, and a positive figure was expected to support it. That reading has become less reliable now, since the domestic institutions are buying in large quantities on the days when the foreign funds are selling.

Another question, which is a bit different from the usual one, concerns the share of Indian companies that are actually owned by the FIIs and the DIIs, and how that ownership has shifted over the last few years. A fund that sells on a particular day may still hold a large stake in a company, while a fund that buys might only possess a small one.

What the September flows show

During the initial nine trading days of September, the domestic institutional investors (DIIs) had net purchases amounting to Rs 24,987 crore, as shown in the popular summary of the exchange data. In that same period, foreign institutional investors (FIIs) made net purchases of just Rs 579 crore, meaning the DIIs bought nearly all the securities.

It is not correct to say that the FIIs were absent from the market in these weeks. On 2 September, the FIIs bought a net Rs 6,688 crore, and the DIIs also bought a net Rs 2,813 crore, according to provisional NSE and BSE data. Even with both the groups buying on that day, the markets closed lower.

This kind of day proves that the daily cash‑flow number doesn’t always point to the market’s direction. The movements of FIIs do not always push Nifty up, nor do their sales always drag it down, because many other traders are also active in the same session.

In the half-year ending December 2025, the gap between the two groups had already grown wider.

The many individual investors are now following the DII line in the daily data as carefully as they follow the FII line. On days when the foreign funds sell heavily, families holding mutual funds through SIPs become the buyers on the other side, because the money they put in every month goes to market through the domestic institutions.

The foreign funds have not stopped trading in Indian shares. Their buying and selling figures on a single day are often large, and the net number shows only the difference between the two. A day of net selling can therefore include a good amount of buying by the same funds, as the session of 15 September showed.

Another issue is the timing. After the market closes, the exchange releases the participant wise figures, so investors read them when the day’s price movements have already been established. Many people then link the two figures together, not realizing that the index for that day was also influenced by trading of proprietary desks, retail traders and other participants.

For the borrowers and savers who see Nifty as just a number blinking on the screen, the story is that a single day's FII or DII figure only paints a half picture. Analysts are now looking at longer‑term flow data and also checking how much of each company the two groups really own, to get the full picture.

DIIs have overtaken FIIs in ownership

Ownership data reflects same pattern that the daily flows indicate. According to a Motilal Oswal report, DIIs held a record 21% of the Nifty 500 companies in June 2026, while FIIs held 17%, a historical low for foreign funds.

The promoters held 49.5% of these firms, while retail investors possessed 12.6%. A year back, in June 2025, FIIs owned 18.9%, so their proportion dropped over four quarters, whereas DII stake has risen by 160 basis points in same period.

The free float view gives a similar picture. Free float means only the shares that are available for trading, leaving out the shares held by promoters. On this basis, the DIIs held 41.2% of the Nifty 500 in March 2026, and the FIIs held 33.8%, so the FII holding was around 0.8 times of the DII holding.

For all the companies listed on the NSE, a brokerage report of May 2026 put the FII holding at 14.7%, a 14 year low, and the DII holding at a record 18.9%.

The data also reflect this trend. In September 2025, Prime Database reported that DII holdings among NSE listed firms were 18.26%, while the share of foreign portfolio investors (FPIs) had fallen to a 13‑year low of 16.71%.

Individuals investing through mutual funds are, in essence, part of this change. When families keep making their SIPs month after month, the money goes to the domestic institutions and the shareholding data then shows those institutions owning a larger part of the listed companies.

For foreign investors the figures are now interpreted differently. They have been shrinking their holdings across several quarters, and the ownership tables published by the companies display the positions only at quarter‑ends. An investor who watches the daily flows and one who checks the quarterly ownership records are therefore looking at two distinct time frames.

The figures are not all measured on the same base. Some are based on the Nifty 500, some on free‑float, and some on all companies listed on the NSE, so each of them looks at a slightly different set of stocks. Brokerages and data providers prepare their own tables using their methods and the quarter dates are not always the same.

Many of the market participants have now taken to comparing the holdings of the DII and FII group company by company, instead of looking at the whole market as a whole. Analysts are trying to find out which sectors and what size of companies have seen an increase in their DII share, and where the FII share has stayed the same.

Why FIIs still matter for large caps

According to Elara Securities’ data for March 2026, Domestic Institutional Investors (DIIs) owned a record 24.9% of these companies, while Foreign Institutional Investors (FIIs) held 22.8%. That 22.8% level is the lowest for FIIs in 12 quarters.

The FII holding in the Nifty 50 was 25.4% in June 2023, so it has come down over the past three years. However, the foreign funds still hold a share of the large companies that is much higher than their share of the entire market.

For the individual investors who hold index funds or large cap funds, this means that the foreign funds remain an active part of the shareholder base of the companies in their portfolios. In the midcap and smallcap segments, the domestic institutions are holding a clearly larger share than the foreign funds.

The funding for domestic institutions mainly comes from the households. Business Standard reported that mutual funds received a record Rs 4.9 trillion in equity purchases during 2025, largely due to SIP inflows and the involvement of retail investors. The families which contribute every month via their bank accounts form the foundation behind the DII purchases reflected in the daily data.

The ownership numbers cited in this article can’t be directly compared, they come from different quarters, different brokers, and various data providers. The forthcoming quarterly shareholding figures will reveal whether the gap between the DII’s and the FII’s widens more.