New Delhi, May 26 (IANS) Indian equity markets saw sharp foreign selling getting offset by robust domestic buying in Q1 CY26, leaving domestic institutional investors as the key stabilising force, a report said on Tuesday.

The report from Ventura said FIIs were aggressive net sellers in Jan–Mar 2026, recording the highest quarterly outflow of the fiscal year at Rs 1,31,122 crore, while domestic institutional investors (DIIs) provided the strongest quarterly support with net inflows of Rs 2,44,052 crore.

The Jan–Mar 2026 period marked the highest quarterly FII sell-off of the fiscal year, driven by global market uncertainty, elevated US bond yields, dollar strength, and cautious sentiment across emerging markets.

The report showed that FII outflows moderated around 34 per cent year‑on‑year to – Rs 2,64,819 crore in FY26 from – Rs 4,03,581 crore in FY25, even as DII inflows surged roughly 47 per cent to Rs 8,43,206 crore from Rs 5,71,959 crore.

The Jan–Mar 2026 quarter highlighted strong domestic resilience in Indian markets, as robust DII inflows “more than offset sharp FII outflows amid heightened global uncertainty and risk-averse foreign investor sentiment,” the report noted.

The FII selling stood at Rs 30,374 crore (in May to date), taking the total FII selling in 2026, so far, to Rs 2,22,343 crore far higher than the total sell figure of Rs 1,66,283 crore for 2025.

Stabilisation of the rupee and improvement in the prospects of earnings growth can bring foreign institutional investors (FIIs) back to Indian stock markets, analysts had said.

Reasons behind this sustained selling are poor earnings growth in India, much better earnings growth and prospects for earnings growth in other markets, high bond yields, particularly in the US, and rupee depreciation, they said

A Jefferies report said that the rupee’s recent weakness may have less to do with oil prices or the current account deficit (CAD), and more to do with domestic investors relentlessly buying equities through SIPs.

—IANS

aar/ag