FIIs Exit Indian Markets Amid Global Jitters; DIIs Absorb Selling Pressure
Stock markets stumble as foreign investors pull out Rs 446 crore; domestic players step in to stabilize sentiment amid global uncertainty and oil price surge
Market Under Pressure as Foreign Investors Offload Shares
Indian equities endured a turbulent trading day on Wednesday, June 12, as key indices declined sharply amid heightened foreign outflows and unsettling developments in global markets. The Nifty50 index dropped by 1%, reflecting widespread caution among investors. Foreign Institutional Investors (FIIs) withdrew Rs 446 crore from domestic equities, signaling a return to their recent selling trend after a brief pause earlier in the week.
The global backdrop weighed heavily on domestic sentiment, marked by rising crude oil prices, geopolitical uncertainty, and a weak performance across international markets. These factors, combined with local incidents and macroeconomic developments, triggered a broad-based sell-off across sectors.
Foreign Investors Resume Selling Spree as Domestic Institutions Anchor Market Stability
On June 11, FIIs and Foreign Portfolio Investors (FPIs) resumed their exit from Indian equities after a temporary buying streak. Provisional data showed that foreign investors collectively sold Rs 3,831 crore worth of shares, reversing the positive momentum witnessed earlier in the week. On the flip side, Domestic Institutional Investors (DIIs) emerged as net purchasers, acquiring equities valued at ₹9,393 crore.
Looking deeper into the numbers, DIIs bought a total of Rs 21,386 crore and sold Rs 11,992 crore worth of stocks, resulting in a net inflow of Rs 9,394 crore. During the same period, foreign investors purchased equities totaling ₹11,656 crore but liquidated a higher volume valued at ₹15,488 crore.
Throughout 2025, overseas investors have largely stayed on the selling side, withdrawing more than ₹1.24 lakh crore from Indian stock markets. Conversely, domestic institutional investors have steadily acted as a stabilizing force, offsetting the sell-off with total net investments surpassing ₹3.16 lakh crore so far this year.
Broader Indices Follow Benchmark in Sell-Off
The selling was not confined to large-cap indices alone. Broader markets, including the Nifty Midcap100 and Nifty Smallcap100, also declined more than 1% each during the day. Every key sectoral index closed in the red, reflecting broad-based investor anxiety and a cautious market sentiment across the board.
Stocks from the energy and aviation sectors were hit especially hard. Shares of oil marketing companies faced the brunt of climbing crude oil prices, which surged over 4% due to escalating tensions in the Middle East, particularly between the US and Iran.
Additionally, the aviation industry faced turbulence following an Air India plane crash in Ahmedabad, further dampening investor confidence in Tata Group shares.
Global Concerns Continue to Weigh on Sentiment
Indian equities echoed the prevailing sense of caution seen in global markets, where investor sentiment remained heavily tilted toward risk avoidance. US markets struggled due to worsening geopolitical tensions and lingering uncertainty over trade relations between Washington and Beijing. These global risks spilled into Indian equities, pushing investors to adopt a more defensive stance.
Market confidence was further impacted by crude oil’s sharp upward move, adding to concerns about rising input costs and potential inflationary pressures. Continued capital withdrawals by foreign investors further intensified the downward pressure and reinforced the negative tone of the trading day.
Positive Economic Data Offers Limited Comfort
Amid the sea of red, some relief emerged from the macroeconomic front. In the United States, the Consumer Price Index (CPI) for May 2025 rose 2.4% year-on-year, coming in marginally below the expected 2.5%. This softer inflation print led to a dip in the US Dollar Index to a seven-week low and strengthened hopes of a potential rate cut by the Federal Reserve in the upcoming months.
On the domestic front, consumer price inflation cooled to 2.82% in May, dipping below the forecasted estimate of around 3%. This reading marks the lowest inflation figure in over six years, offering a cushion to the Reserve Bank of India’s policy outlook and possibly paving the way for monetary easing if global conditions deteriorate further.
Outlook: Volatility Likely to Persist
Despite the supportive economic indicators, the prevailing market outlook remains uncertain. With global developments continuing to drive investor behavior, volatility is expected to persist in the near term.
Market participants are likely to keep a close watch on further updates regarding the US-China trade talks, developments in the Middle East, crude oil price movements, and central bank actions globally. Domestically, expectations surrounding the progress of the US-India trade deal could also influence sentiment in the coming weeks.
Final Thoughts
The Indian stock market experienced a challenging session on June 12, as selling by foreign investors, coupled with weak global cues and a spike in oil prices, led to broad-based declines. While FIIs sold shares worth Rs 446 crore, DIIs stepped in as stabilizing forces with net buying activity, reflecting their continued support during turbulent times.
Despite some positive signals from inflation data, both in India and the US, investor sentiment remains fragile amid global tensions and economic uncertainty. With foreign outflows persisting in 2025 and macroeconomic risks looming large, the markets are expected to remain in a consolidation phase, tracking international developments closely.
Investors may find some reassurance in the resilience shown by domestic institutions and softening inflation trends. However, a cautious approach is advisable as the equity markets navigate a complex global environment.
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