Archive · 30 Jan 2026
Indian Mutual Funds Surge as DIIs Counter FPI Outflows
Over the past ten years, more Indian households have started investing in mutual funds through something called SIPs, which is like a regular savings plan.
The money going into these SIPs has grown more than seven times, from ₹4,000 crore to ₹28,000 crore every month.
People are now saving more in mutual funds and stocks instead of just keeping their money in bank accounts.
This change shows that people are becoming more comfortable with investing in the stock market, especially through mutual funds, which are managed by professionals.
More people from smaller cities are also starting to invest, and this trend has helped make the Indian stock market more stable.
However, foreign investors have been selling off their investments, but domestic investors have been buying more, which has helped keep the market steady.
Overall, it's a big shift in how Indians are saving and investing their money, with a focus on long-term growth and stability.
Average monthly SIP inflows increased seven-fold from ₹4,000 crore in FY17 to ₹28,000 crore in FY26 (April–November).
Share of equities and mutual funds in household financial savings rose from 2% in FY12 to 15.2% in FY25.
Share of bank deposits in household financial savings declined from 58% in FY12 to 35% in FY25.
Mutual fund assets grew from less than 10% of GDP in the early 2010s to 23% of GDP by FY26, totaling ₹80 lakh crore.
Retail participation in mutual funds expanded geographically, with 3.5 crore investors from non-Tier I and Tier II cities as of December 2025.
DIIs, particularly mutual funds and insurance companies, have provided strong support to Indian equities, counterbalancing persistent selling by FIIs.
In Q2 FY26, the share of DIIs in NSE-listed equities rose to 18.3%, surpassing FIIs at 16.7%, a 13-year low.
The combined share of DIIs, retail investors, and high-net-worth individuals reached an all-time high of 27.8% in Q2 FY26.
FIIs have been net sellers since July 2025, with net sales of ₹36,771.10 crore in January 2026, while DIIs have been net buyers, purchasing ₹67,183.01 crore in the same period.
MSCI India gained 8.13% in 2026, though it lagged behind other North Asian markets like Korea, Taiwan, and China.
- Who
- Indian households, domestic institutional investors (DIIs), and foreign institutional investors (FIIs)
- What
- A significant shift in household savings towards mutual funds and equities, with DIIs counterbalancing FII outflows
- When
- Over the past decade, with notable changes in FY26 (April–November)
- Where
- India, with increased participation from non-Tier I and Tier II cities
- Why
- Structural shift in household saving behavior, preference for disciplined long-term investments, and diversification of savings, coupled with volatile FPI trends
Pro-Market Diversification
Cautious Investment Approach
Investment Strategy
Pro-Market Diversification
Proponents argue that the shift towards mutual funds and equities reflects a healthy diversification of household savings, reducing reliance on traditional bank deposits and promoting financial inclusion.
Cautious Investment Approach
Critics caution that the rapid growth in mutual fund investments, especially from retail investors, may lead to market volatility and potential losses if economic conditions deteriorate or if investors pull out en masse.
Market Stability
Pro-Market Diversification
Supporters of the current trend highlight that the increased participation of DIIs has stabilized the market against FPI outflows, indicating a more resilient and self-sustaining investment ecosystem.
Cautious Investment Approach
Skeptics point out that the reliance on DIIs to counterbalance FPI outflows could be risky, as domestic investors might not have the same depth of resources or risk tolerance as foreign investors.
- Average monthly SIP inflows (FY17)
- ₹4,000 crore
- Average monthly SIP inflows (FY26)
- ₹28,000 crore
- Share of equities and mutual funds in household financial savings (FY12)
- 2%
- Share of equities and mutual funds in household financial savings (FY25)
- 15.2%
- Share of bank deposits in household financial savings (FY12)
- 58%
- Share of bank deposits in household financial savings (FY25)
- 35%
- Mutual fund assets as a percentage of GDP (early 2010s)
- 10%
- Mutual fund assets as a percentage of GDP (FY26)
- 23%
- Total mutual fund assets (FY26)
- ₹80 lakh crore
- Unique mutual fund investors (December 2025)
- 5.9 crore
- Investors from non-Tier I and Tier II cities (December 2025)
- 3.5 crore
- Share of mutual funds in NSE-listed companies (Q2 FY26)
- 10.9%
- FII net sales in January 2026
- ₹36,771.10 crore
- DII net purchases in January 2026
- ₹67,183.01 crore
- MSCI India gain in 2026
- 8.13%
- DII share in NSE-listed equities (Q2 FY26)
- 18.3%
- FII share in NSE-listed equities (Q2 FY26)
- 16.7%
- Combined share of DIIs, retail investors, and HNIs (Q2 FY26)
- 27.8%
Sources
SIP inflows jump seven-fold over past decade; household savings shift towards mutual funds: Economic Survey
Gold & Silver Prices To Stay High Amid Global Risks, Economic Survey Warns
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