Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) displayed contrasting investment behavior in Indian equity markets today, with significant differences in their trading patterns and market participation.

Institutional Investment Activity

The trading session witnessed notable institutional activity across both foreign and domestic investor categories. The investment flows reflected divergent market sentiment between overseas and local institutional players.

Market Dynamics

Foreign Institutional Investors recorded net sales worth ₹1,832.46 crore, indicating continued selling pressure from overseas investors. This outflow represents the ongoing trend of foreign investors reducing their exposure to Indian equities.

Domestic Institutional Investors demonstrated strong buying interest with net purchases of ₹2,446.33 crore. The substantial investment by DIIs suggests confidence among local institutional players in the current market environment and Indian equity prospects.

Investment Flow Analysis

The net difference between DII purchases and FII sales resulted in a positive institutional flow of ₹613.87 crore for the session. This positive net institutional investment was primarily driven by the robust buying activity from domestic institutional investors, which more than offset the selling pressure from foreign counterparts.

The contrasting investment patterns between FIIs and DIIs highlight the different risk assessments and market outlook held by foreign versus domestic institutional investors in the current market scenario.

Foreign institutional investors extended their selling momentum into 2026, pulling out ₹22,420 crore from Indian equity markets across 19 sectors in the first half of January. The sustained outflows reflect continued caution among overseas investors amid valuation concerns and global uncertainties.

FMCG Sector Bears Maximum Selling Pressure

The Fast Moving Consumer Goods sector emerged as the worst affected, witnessing foreign outflows worth ₹6,128 crore during the period. This selling pressure comes after the sector already faced significant withdrawals of ₹35,000 crore in 2025, marking it as the second-highest sectoral outflow last year.

According to Pranay Aggarwal, director and CEO of Stoxkart, the FMCG sector has witnessed mostly value-driven foreign outflows as these stocks typically command high Price to Earnings ratios of over 50 times. "Since foreign investors are valuation sensitive, they seem to have withdrawn funds," Aggarwal explained.

Financial Services and IT Face Continued Outflows

Financial services and information technology sectors also experienced notable selling pressure, with foreign investors withdrawing ₹3,190 crore and ₹2,075 crore respectively in the first half of January. These outflows follow substantial annual withdrawals in 2025, where IT sector faced the highest outflows of ₹74,698 crore.

Bhavik Joshi, business head at INVasset PMS, noted that banking and financial services stocks had shown resilience even as mid- and small-cap segments weakened through much of 2025. "There may be some profit-taking by global investors in BFSI after last year's strong run, but the fundamental outlook for the sector remains constructive," he said.

For the IT sector, Aggarwal indicated that higher tariff threats are outweighing the tailwinds from rupee depreciation, prompting foreign investors to take a backseat in IT stocks.

Metals and Mining Attract Foreign Investment

Contrary to the broad selling trend, foreign investors demonstrated buying interest in select sectors, purchasing shares worth ₹3,406 crore across three sectors. The metals and mining sector attracted the highest inflows of ₹2,689 crore, building on the ₹2,984 crore inflows received in December.

The renewed interest in metals coincides with strong precious metal performance, with gold prices jumping 5.10% and silver gaining 3.10% in India. When dollar-denominated metal prices strengthen, mining and metal stocks typically respond positively, analysts noted.

Joshi explained that foreign investors appear to be rotating allocations toward metal-linked equities, driven by the recent outperformance of gold and silver. "With the current rally being further supported by geopolitical tensions, this uptrend could extend over the next six to twelve months," he added.

Industrial Metals Gain Investor Attention

Industrial metals such as copper and aluminium are seeing renewed investor interest, partly because there are no direct ETF avenues for these metals, making equities the primary route for exposure. This structural factor continues to support foreign investment flows into the metals and mining sector despite broader market selling pressure.