How FII and DII Affect Stock Market?

Foreign Institutional Investors (FIIs) bring global capital into the market, often causing sharp short-term movements based on international trends. Domestic Institutional Investors (DIIs), like mutual funds and insurance companies, invest with a more stable, long-term view. When FIIs buy heavily, markets usually rise; when they sell, markets may fall — but DII buying can help balance the impact. Together, their flows influence market direction, sentiment, and overall liquidity.