Domestic Institutional Investors Reach New Record in Net Buying, Absorbing Foreign Investors' Net Sell-Off

Domestic Institutional Investors Set New Record High

Domestic institutional investors (DIIs) have set a new record high, net buying shares worth Rs 14,895 crore on March 30, according to provisional data on the exchanges. This marks the strongest one-day domestic institutional support seen in well over 1.5 years, surpassing the recent high in the FII-selling vs DII-buying tug-of-war.

In contrast, Foreign investors (FIIs/FPIs) offloaded Rs 11,163 crore net-worth of Indian equities in the same trading session. This comes amid a month-long FII selling spree that has seen foreign investors offload over Rs 1.08 lakh crore in March alone, with DIIs consistently stepping in as the market's stabilizing force.

Market Performance

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The Nifty 50 declined 2.1%, while broader markets remained under pressure, with the Midcap 100 and Smallcap 100 indices falling 2.7% each, reflecting widespread selling across segments. The sell-off was largely driven by a spike in crude oil prices.

The rupee weakened past 95 against the US dollar, hitting a fresh record low despite RBI intervention, and has depreciated over 4% in March. At the same time, India's 10-year bond yield crossed 7%, its highest level in over 21 months.

Sectoral Performance

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Heavyweight financials remained under pressure, with banks, private banks, and PSU lenders declining 3-4.6%. The sell-off followed the RBI's move to tighten position limits on onshore rupee forex exposures to $100 million per bank (with compliance required by April 10), which is expected to trigger unwinding of large arbitrage positions and cause near-term volatility in the sector.

Comparison of DIIs and FIIs

For the year so far, FII/FPIs have net sold worth Rs 1.73 lakh crore of Indian equities while DIIs have net bought Rs 2.41 lakh crore.

Expert Analysis

According to Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, the market's fragile state is likely to persist, driven by crude prices, currency trends, and foreign flows. With markets shut tomorrow for Mahavir Jayanti, the next session will reflect interim global developments.

Key Drivers of Market Performance

• Escalating tensions in West Asia continued to weigh heavily on markets, as the ongoing US-Israel conflict with Iran entered its fifth week and expanded across the region.
• Fresh attacks, including disruptions around key shipping routes near the Arabian Peninsula and the Red Sea, have intensified concerns over global energy supply.
• Rising crude oil prices emerged as a key driver of the risk-off sentiment, reflecting tightening financial conditions and weighing on market performance.
• Brent crude rose ~3% in volatile sessions, currently trading near $108 per barrel and taking its monthly gains to nearly 48%.
• US crude (WTI) climbed above $100-102, recording over 50% gains for the month.