DII buying offsets FII outflows as domestic liquidity keeps Indian markets resilient

New Delhi, July 19 (IANS) Strong buying by domestic institutional investors (DIIs) effectively offset heavy foreign institutional investor (FII) selling during the week — highlighting the resilience of domestic liquidity even as global uncertainties kept market sentiment cautious, analysts said on Sunday.

During the week, FIIs remained net sellers, pulling out Rs 8,743.35 crore from Indian equities. However, DIIs more than compensated for the outflows by investing a net Rs 8,790.75 crore, helping the benchmark Nifty end the week at 24,334.30.

According to market analysts, the divergence between foreign and domestic institutional flows underscores the growing role of domestic investors in supporting Indian equities.

Strong domestic liquidity, stable macroeconomic fundamentals and improving corporate earnings visibility continue to provide structural support to the market despite global headwinds.

“Elevated geopolitical uncertainty, volatility in crude oil prices, and evolving global monetary policy expectations are likely to keep market volatility elevated over the near term,” an analyst mentioned.

Global cues remained mixed during the week as geopolitical tensions in West Asia kept crude oil prices elevated, with Brent crude trading around $81.67 per barrel.

Currency movements and evolving global monetary policy expectations also continued to influence investor sentiment.

Analysts believe that elevated geopolitical risks, fluctuations in crude oil prices and uncertainty over the trajectory of global interest rates are likely to keep market volatility high in the near term.

“Going forward, the ongoing Q1 FY27 earnings season will remain the primary catalyst for sectoral rotation and stock-specific opportunities,” as per the analyst.

“Investors should continue to focus on fundamentally strong companies with robust earnings visibility, and improving relative strength rather than chasing momentum-driven rallies,” a market expert mentioned.

The ongoing first-quarter earnings season for FY27 is expected to emerge as the key driver of market direction in the coming weeks, with investors likely to focus on company-specific earnings performance rather than broad-based momentum.

They advised investors to remain selective and focus on fundamentally strong companies with healthy earnings visibility and improving relative strength instead of chasing sharp rallies.

–IANS

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