The Role of Domestic Institutional Investors (DIIs or Mutual Funds) in Stabilizing Indian Stock Markets against Foreign Institutional Investors (FIIs) Outflows

Domestic Institutional Investors (DIIs), particularly mutual funds, have emerged as a critical stabilizing force in Indian stock markets, often acting as a counter-cyclical shield against volatile Foreign Institutional Investor (FII) outflows. Driven by high Systematic Investment Plan (SIP) inflows, DIIs provide structural, long-term liquidity, absorbing selling pressure during foreign sell-offs to reduce market volatility.