VIRDIRESEARCH

What FII and DII flows mean

Every evening the market reports how much foreign and domestic institutions bought or sold. Here is who they are, where the numbers come from, and how not to over-read them.

Topic
Market structure
Published
Reading time
2 min read
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Sample content. This page shows the layout. Its text is a placeholder and any figures are illustrative, not market data.

Who the two groups are

FIIs, foreign institutional investors, are funds based outside India that invest in Indian markets. The formal term today is foreign portfolio investor (FPI), under SEBI's Foreign Portfolio Investors Regulations, 2019.1 They include overseas pension funds, sovereign wealth funds, mutual funds and hedge funds. News reports still use FII and FPI interchangeably.

DIIs, domestic institutional investors, are Indian institutions: mutual funds, insurance companies, banks and pension funds.

Where the numbers come from

There are two common sources, and they rarely match exactly.

SourceWhat it reportsWhen
Exchange provisional dataNet buying or selling by FII/FPI and DII in the cash market, across exchangesAfter each trading session
NSDL FPI dataFPI investment by asset class, including debt and the primary marketDaily, with fuller monthly figures

The exchange numbers are provisional and cover secondary-market cash equity trades. The NSDL figures come from custodian reporting and include routes such as IPOs and other primary-market issues.2 So a day can show selling in one and buying in the other.

How to read them

Treat a single day's figure as weather, not climate. Flows matter more as a trend over weeks and months.

Daily flows are noisy. The trend is the signalIllustrative data
  • Foreign investors, cumulative
  • Domestic institutions, cumulative
Daily flows are noisy. The trend is the signal (illustrative data)
PeriodForeign investors, cumulativeDomestic institutions, cumulative
W100
W2-45
W3-24
W4-79
W5-912
W6-611
W7-1115
W8-1318
W9-1016
W10-1420
W11-1219
W12-1523
Twelve imaginary weeks in arbitrary units. These figures are made up to show the idea. They are not market data.

Common mistakes

  • Reading causation into one day. Prices and flows move together, but either can drive the other.
  • Forgetting the other side. Every share sold is bought by someone. "Foreign selling" means foreign investors were net sellers to everyone else, including retail investors.
  • Ignoring derivatives. The cash-market figures leave out futures and options positions, which can be large.
  • Mixing up sources. Compare provisional with provisional, and NSDL with NSDL.

What this explainer is not

It explains the data. It is not a view on where flows or markets will go.

Sources and notes

  1. Securities and Exchange Board of India, SEBI (Foreign Portfolio Investors) Regulations, 2019. https://www.sebi.gov.in ↩

  2. National Securities Depository Limited, FPI Monitor. https://www.fpi.nsdl.co.in ↩

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