Stock Market: FIIs back? Rishabh Nahar says trust the domestic shield
Nahar said that what has kept markets resilient against historic FII selling is the domestic shield provided by DIIs, noting that recent foreign inflows appear to be a tactical trade rather than a structural comeback.
- Nov 6, 2025,
- Updated Nov 6, 2025 12:14 PM IST
The RBI’s decisive policy actions in 2025, which include cutting the repo rate, signal an unambiguous shift toward growth and are creating real momentum for credit expansion, says Rishabh Nahar, Partner and Fund Manager at Qode Advisors PMS.
In an interview with Ritik Raj of Business Today, Nahar said that what has kept markets resilient against historic FII selling is the domestic shield provided by DIIs, noting that recent foreign inflows appear to be a tactical trade rather than a structural comeback.
The market's entire stability in 2025 rests on the 'domestic shield' from DIIs, which has absorbed historic FII selling. Now, in October, FIIs have finally returned as net buyers. How do you read this? Is this FII inflow a durable, strategic reversal, or just a short-term tactical trade on oversold conditions?
India’s equity market performance in 2025 has been heavily shaped by domestic institutional investor (DII) support, filling the substantial gap left by foreign institutional investors (FIIs). Recent figures show that FIIs have sold around ₹1.98 lakh crore in Indian equities year-to-date, and over the last 21 months, their total net selling is approximately ₹3.19 lakh crore. Such persistent foreign outflows are usually inconsistent with a classic bull market, which typically benefits from strong, sustained foreign inflows.
What has kept markets resilient is the domestic bid DIIs, including mutual funds, insurance companies, and pension funds, have consistently absorbed this supply, supporting prices even as foreign funds exited. This underlines the reality of the “domestic shield” behind the market.
However, a structural FII comeback is not yet evident. Recent data signals continued FII selling in certain periods (e.g., a ₹6,769 crore net outflow in the cash segment as of October 31, 2025). Any uptick in FII buying so far seems tactical, potentially a response to oversold valuations or specific global flows rather than a genuine, long-term bullish repositioning. From a portfolio standpoint, it makes sense to treat FII buying as a supportive tailwind, not the core thesis. Until foreign inflows become larger and stickier, markets may remain sensitive to the stance and resilience of domestic flows. Domestic 24k gold has hovered around Rs 1,24,000+/10g after a blockbuster run driven by rate‑cut expectations and safe‑haven demand. What allocation case do you make now—SGBs, ETFs, or physical?
Indian 24k gold has surged to over ₹1,24,000 per 10 grams in 2025, fueled by global rate-cut expectations and heightened safe-haven demand. In this climate, gold ETFs stand out as the most effective way to invest offering both liquidity and transparency, without the drawbacks of physical storage, purity concerns, or making charges. Sovereign Gold Bonds (SGBs) deliver attractive interest and tax benefits, but their lack of secondary market liquidity limits flexibility, while physical gold still faces operational and cost-related challenges.
Looking ahead, gold should be seen not as a portfolio’s primary return generator but as a robust risk diversifier. Many investors are chasing gold on the back of last year’s stellar performance, but recent volatility should remind us that gold, too, can experience swings.
As the global economic order evolves and questions linger over the US dollar’s reserve status, gold’s role as a strategic hedge becomes even more relevant thanks to its consistently low correlation with equities and unique ability to buffer drawdowns. In building a resilient portfolio, gold deserves a meaningful allocation as insurance, not speculation. After a cumulative 100 bps repo cut in 2025 and CRR reduction, RBI now signals neutrality. How does this shape your outlook for credit growth, bond yields, and equity risk premium into FY26?
The RBI’s decisive policy actions in 2025 cutting the repo rate by 100 basis points and reducing the CRR signal an unambiguous shift toward growth, with the new Governor steering the central bank into a more pragmatic, pro-investment phase. T
his growth-oriented framework is creating real momentum for credit expansion: banks now enjoy ample and affordable liquidity, which is flowing into the private sector, MSMEs, and consumption, setting the stage for a potential surge in productive lending and capex in FY26.
Crucially, the lower interest rate environment and policy clarity are anchoring both bond yields and the equity risk premium at healthier levels, incentivizing long-term investment and strengthening market confidence. What stands out is the RBI’s ability to instill conviction across the financial system reducing uncertainty and encouraging risk-taking in productive areas marking a new era where monetary policy is directly amplifying India’s structural growth ambitions rather than merely reacting to short-term shocks. With a record high IPO pipeline and record SIP inflows, do you expect liquidity stress in secondary markets? How should retail investors balance IPO enthusiasm with long-term allocations?
Looking back, history shows that outsized IPOs often marked key turning points in equity cycles. Classic examples Reliance Power in 2008 at the very summit of a bull market, or more recently Paytm in 2021 were so large and hyped that they soaked up market liquidity, leading not just to correction in the new issues but also pulling broader indices sharply lower.
Typically, when these mega-IPOs are oversubscribed amidst euphoria, and valuations become heavily stretched, it signals exhaustion: the market’s risk appetite has peaked and liquidity struggles to sustain the onward rally.
But what stands out about the current IPO frenzy in 2025 is the shift in investor psychology and market structure. Today, risk appetite among retail investors is running especially high. A good part of this enthusiasm comes from a generational change in how risk is seen: with speculative avenues like online gaming curtailed by government bans (such as on Dream11 and other platforms), the stock market’s IPO pipeline has become the new “arena” for action. For many retail participants, listing day has become a sanctioned game of high-stakes probability 20% up or down is seen as a tolerable swing, not a deterrent.
As a result, while the IPO rush is intense, it doesn’t signal an immediate liquidity crunch or a classic “top.” Instead, it reflects a market ecology where risk-taking is both widespread and legitimized, and where participants accept volatility as part of the game rather than as a sign to exit. That said, discipline remains paramount.
Over-allocating to hot IPOs, or ignoring the risks lurking beneath exuberance, can still lead to sharp corrections just as history has shown. The wisdom now is to balance the excitement of the primary market with an unwavering focus on core, quality holdings, treating IPO exposure as a tactical supplement rather than the main act.
The RBI’s decisive policy actions in 2025, which include cutting the repo rate, signal an unambiguous shift toward growth and are creating real momentum for credit expansion, says Rishabh Nahar, Partner and Fund Manager at Qode Advisors PMS.
In an interview with Ritik Raj of Business Today, Nahar said that what has kept markets resilient against historic FII selling is the domestic shield provided by DIIs, noting that recent foreign inflows appear to be a tactical trade rather than a structural comeback.
The market's entire stability in 2025 rests on the 'domestic shield' from DIIs, which has absorbed historic FII selling. Now, in October, FIIs have finally returned as net buyers. How do you read this? Is this FII inflow a durable, strategic reversal, or just a short-term tactical trade on oversold conditions?
India’s equity market performance in 2025 has been heavily shaped by domestic institutional investor (DII) support, filling the substantial gap left by foreign institutional investors (FIIs). Recent figures show that FIIs have sold around ₹1.98 lakh crore in Indian equities year-to-date, and over the last 21 months, their total net selling is approximately ₹3.19 lakh crore. Such persistent foreign outflows are usually inconsistent with a classic bull market, which typically benefits from strong, sustained foreign inflows.
What has kept markets resilient is the domestic bid DIIs, including mutual funds, insurance companies, and pension funds, have consistently absorbed this supply, supporting prices even as foreign funds exited. This underlines the reality of the “domestic shield” behind the market.
However, a structural FII comeback is not yet evident. Recent data signals continued FII selling in certain periods (e.g., a ₹6,769 crore net outflow in the cash segment as of October 31, 2025). Any uptick in FII buying so far seems tactical, potentially a response to oversold valuations or specific global flows rather than a genuine, long-term bullish repositioning. From a portfolio standpoint, it makes sense to treat FII buying as a supportive tailwind, not the core thesis. Until foreign inflows become larger and stickier, markets may remain sensitive to the stance and resilience of domestic flows. Domestic 24k gold has hovered around Rs 1,24,000+/10g after a blockbuster run driven by rate‑cut expectations and safe‑haven demand. What allocation case do you make now—SGBs, ETFs, or physical?
Indian 24k gold has surged to over ₹1,24,000 per 10 grams in 2025, fueled by global rate-cut expectations and heightened safe-haven demand. In this climate, gold ETFs stand out as the most effective way to invest offering both liquidity and transparency, without the drawbacks of physical storage, purity concerns, or making charges. Sovereign Gold Bonds (SGBs) deliver attractive interest and tax benefits, but their lack of secondary market liquidity limits flexibility, while physical gold still faces operational and cost-related challenges.
Looking ahead, gold should be seen not as a portfolio’s primary return generator but as a robust risk diversifier. Many investors are chasing gold on the back of last year’s stellar performance, but recent volatility should remind us that gold, too, can experience swings.
As the global economic order evolves and questions linger over the US dollar’s reserve status, gold’s role as a strategic hedge becomes even more relevant thanks to its consistently low correlation with equities and unique ability to buffer drawdowns. In building a resilient portfolio, gold deserves a meaningful allocation as insurance, not speculation. After a cumulative 100 bps repo cut in 2025 and CRR reduction, RBI now signals neutrality. How does this shape your outlook for credit growth, bond yields, and equity risk premium into FY26?
The RBI’s decisive policy actions in 2025 cutting the repo rate by 100 basis points and reducing the CRR signal an unambiguous shift toward growth, with the new Governor steering the central bank into a more pragmatic, pro-investment phase. T
his growth-oriented framework is creating real momentum for credit expansion: banks now enjoy ample and affordable liquidity, which is flowing into the private sector, MSMEs, and consumption, setting the stage for a potential surge in productive lending and capex in FY26.
Crucially, the lower interest rate environment and policy clarity are anchoring both bond yields and the equity risk premium at healthier levels, incentivizing long-term investment and strengthening market confidence. What stands out is the RBI’s ability to instill conviction across the financial system reducing uncertainty and encouraging risk-taking in productive areas marking a new era where monetary policy is directly amplifying India’s structural growth ambitions rather than merely reacting to short-term shocks. With a record high IPO pipeline and record SIP inflows, do you expect liquidity stress in secondary markets? How should retail investors balance IPO enthusiasm with long-term allocations?
Looking back, history shows that outsized IPOs often marked key turning points in equity cycles. Classic examples Reliance Power in 2008 at the very summit of a bull market, or more recently Paytm in 2021 were so large and hyped that they soaked up market liquidity, leading not just to correction in the new issues but also pulling broader indices sharply lower.
Typically, when these mega-IPOs are oversubscribed amidst euphoria, and valuations become heavily stretched, it signals exhaustion: the market’s risk appetite has peaked and liquidity struggles to sustain the onward rally.
But what stands out about the current IPO frenzy in 2025 is the shift in investor psychology and market structure. Today, risk appetite among retail investors is running especially high. A good part of this enthusiasm comes from a generational change in how risk is seen: with speculative avenues like online gaming curtailed by government bans (such as on Dream11 and other platforms), the stock market’s IPO pipeline has become the new “arena” for action. For many retail participants, listing day has become a sanctioned game of high-stakes probability 20% up or down is seen as a tolerable swing, not a deterrent.
As a result, while the IPO rush is intense, it doesn’t signal an immediate liquidity crunch or a classic “top.” Instead, it reflects a market ecology where risk-taking is both widespread and legitimized, and where participants accept volatility as part of the game rather than as a sign to exit. That said, discipline remains paramount.
Over-allocating to hot IPOs, or ignoring the risks lurking beneath exuberance, can still lead to sharp corrections just as history has shown. The wisdom now is to balance the excitement of the primary market with an unwavering focus on core, quality holdings, treating IPO exposure as a tactical supplement rather than the main act.