**MARKET BRIEF: FPI Retreat & Domestic Resilience** **Foreign Institutional Flows: A Two-Pronged Pullback** Foreign Portfolio Investors (FPIs) have signaled a distinct shift in sentiment toward Indian equities in Fiscal Year 2026. While the overall intensity of selling in the secondary market has moderated compared to the previous fiscal year, a critical new trend has emerged: a sharp decline in primary market participation. Latest data indicates that FPI investments in Initial Public Offerings (IPOs) and Qualified Institutional Placements (QIPs) have nearly halved. In the first 10 months of FY26, foreign inflows into the primary market stood at approximately **$7.2 billion**, a steep drop from the **$13.3 billion** recorded during the same period last year. This contraction in primary market bets—traditionally a stronghold for foreign capital even during sell-offs—points to a broader "waning interest." Valuation concerns, global reallocation toward AI-centric markets like the US and Taiwan, and recent tax adjustments (higher STT) in the Union Budget 2026-27 have contributed to this caution. In January 2026 alone, FPIs withdrew nearly **₹36,000 crore** from Indian equities. **Domestic Institutions: The Stability Anchor** In stark contrast, Domestic Institutional Investors (DIIs) have solidified their role as the market's primary shock absorber. Mutual funds and insurance companies have maintained a relentless buying spree, effectively countering foreign outflows. For the first 10 months of FY26, DII net investments reached a massive **₹4.2 lakh crore**, matching the record pace of the previous year. In January 2026, domestic funds injected over **₹43,900 crore**, ensuring liquidity remained robust despite global volatility. **Structural Shift in Ownership** This divergence in flow dynamics has accelerated a historic shift in market ownership. DII holdings in NSE-listed companies have now surpassed FPI holdings, with domestic ownership rising to approximately **18.7%**, while foreign ownership has slipped to a multi-year low of around **16.9%**. This trend underscores a structural transition where Indian markets are becoming increasingly self-reliant, driven by sustained retail SIP flows and domestic institutional depth.