MUMBAI: The rally that carried the Sensex to an eight-month high on Wednesday has an unusual feature. The domestic institutions that absorbed record foreign selling over the past year have now turned net sellers.
Domestic institutional investors (DIIs), including mutual funds, insurers, banks and pension funds, have been net sellers in all six regular trading sessions this month through November 9. Their cumulative net sales during this period stood at Rs 31,369 crore, according to provisional exchange data. This included Rs 10,445 crore on November 5, one of the largest single-day DII sales on record.
For the week ended November 6, DIIs recorded net sales of Rs 24,197 crore, ending an 11-week buying streak.
Foreign investors have been on the other side of these trades. Foreign institutional investors (FIIs) bought a net Rs 56,771 crore between October 30 and November 9. On November 5 alone, they bought Rs 14,975 crore, their biggest single-day purchase in more than a year.
Brokers attribute the DII selling to profit-booking after a rally that lifted the Nifty 8.6 per cent in six sessions.
"The sustainability of foreign inflows would be the key variable in the coming weeks, particularly as domestic institutions have stepped up profit-booking following the sharp rally," Pabitro Mukherjee, deputy vice president for research at Bajaj Broking, said.
The institutional selling does not, by itself, indicate a withdrawal of retail money from equity mutual funds. The latest available AMFI data for September 2026 showed net equity mutual fund inflows of Rs 38,307 crore, while monthly SIP contributions reached Rs 32,490 crore. These figures, however, predate the current November rally.
"There is a sharp reversal in institutional activity, with FPIs turning aggressive buyers while DIIs emerged as net sellers on all trading days," V K Vijayakumar, chief investment strategist at Geojit Investments, said.
The shift is significant given the role DIIs played in supporting the market over the past year. They bought a record Rs 8.55 lakh crore of Indian equities in Samvat 2082, cushioning record foreign selling of Rs 4.55 lakh crore during the same period.
The change in institutional flows raises questions about how sustainable the rally would be if foreign buying slows and domestic institutions continue booking profits. The latest figures show that foreign inflows have more than offset domestic institutional selling, but the balance could change if either group reverses its position.
On Wednesday, the Sensex opened 1,142.03 points higher at 82,248.68, while the Nifty opened at 25,337.80. Both indices reached their highest levels since February 27.
The next indicators to watch are the provisional institutional flow figures at Wednesday's close and AMFI's November data, expected in the second week of December. Another important question is whether the current selling marks a temporary spell of profit-booking or a longer-term shift in domestic institutional investment patterns.
(with inputs from media organisations)