Foreign Institutional Investor (FPI) and Domestic Institutional Investor (DII) flows are the invisible hand moving Indian markets. While retail traders watch charts, institutions move billions based on macro flows. Understanding and tracking FPI/DII is critical for any serious trader.
What Are FPI and DII?
FPI (Foreign Portfolio Investment): Money flowing in/out from international hedge funds, pension funds, and asset managers
DII (Domestic Institutional Investment): Money from Indian mutual funds, insurance companies, and domestic funds
Why FPI/DII Flows Matter
- Volume drivers: FPI/DII account for 40-50% of daily market turnover on NSE
- Trend setters: Positive FPI inflows = extended bull runs, Negative FPI outflows = crashes
- Sector rotators: FPI prefers large-caps (Nifty 50), DII rotates to mid/small-caps
- Reversal signals: Trend reversals often coincide with flow reversals
- Early warning: Daily FPI flows signal next day’s direction
How to Track FPI/DII Flows
Official Sources (Free)
-
NSDL Website: fpi.nsdl.co.in (Official FPI data)
- Daily FPI flows
- Category-wise breakdown
- Sector-wise flows
- Updated 6:00 PM daily
-
RBI Website: rbi.org.in
- Weekly FPI flows
- Capital flow analysis
- Reserve position data
-
SEBI: sebi.gov.in
- Investment limits
- Sector allocation
- Historical trends
Broker Platforms
- Upstox: Shows FPI/DII in research section
- Kite (Zerodha): FPI/DII tracking built-in
- 5paisa: Real-time FPI flows
- TradingView: FPI flow indicators
Key FPI/DII Patterns to Trade
Pattern 1: Positive FPI Inflow
Signal:
- FPI buying more than selling (Positive flow)
- Consistent for 3+ consecutive days
- Amount > ₹500 crore per day
Implication: Institutional accumulation, strong bull run starting
Sectors benefiting: IT, Banking, Large-cap Pharmaceuticals
Action: LONG sector ETFs, especially Nifty IT and Bank ETFs
Example: Jan 2026 saw ₹40,000 crore FPI inflows → Nifty 50 rose 15% in 2 weeks
Pattern 2: FPI Reversal
Signal:
- FPI was positive for weeks
- Suddenly turns negative
- Outflows exceed ₹1,000 crore
Implication: Peak reached, distribution phase starting
Action: Book profits, reduce long positions, prepare for pullback
Timing: FPI reversals often precede crashes by 5-10 trading days
Pattern 3: DII Counter-Flow
Signal:
- FPI is outflowing (negative)
- DII is simultaneously buying (positive)
- They offset each other
Implication: Domestic strength, mutual funds protecting market
Action: LONG Indian mega-cap companies, expect slower correction
Sector-Specific FPI Behavior
Information Technology (Nifty IT):
- FPI sensitive (+3% per ₹1000 cr inflow)
- Global tech trends matter
- Watch Fed interest rates
Banking (Nifty Bank):
- FPI loves on rate hike expectations
- NPA concerns trigger outflows
- Watch RBI policy
Pharma (Nifty Pharma):
- Moderate FPI sensitivity
- Defensive during FPI outflows
- Earnings growth drives FPI
Energy:
- Oil price sensitive
- FPI outflows during oil price falls
- Cyclical sector
Practical FPI/DII Trading Framework
Daily Routine (5 minutes)
6:30 PM: Check NSDL for daily FPI/DII flows
- FPI > +500 cr? = Bullish overnight
- FPI < -500 cr? = Bearish overnight
- Look at 5-day average trend
6:35 PM: Identify sector rotation
- Where did FPI go today?
- IT getting outflow but banking inflow? = Rotation signal
9:15 AM (Next day): Execute based on FPI signal
- Positive FPI → LONG sector ETFs showing FPI interest
- Negative FPI → SHORT top gainers, LONG defensive stocks
Weekly Analysis
Every Friday:
- Tally up weekly FPI flows (Monday-Friday)
- Compare to previous week
- If reversing = Major signal
- Project next week direction
Monthly Strategy
Month Start (1st-5th):
- Check FPI flows for current month YTD
- If negative overall = Reduce exposure
- If positive momentum = Increase exposure
Real-World Example: Trading With FPI
Monday (FPI Data: +₹2,500 cr)
- Strong inflow
- Identified going to IT and Banking sectors
- Action: BUY Nifty IT ETF at close
Tuesday-Wednesday (FPI Data: +₹1,800 cr, +₹1,200 cr)
- Continued positive
- Momentum increasing
- Action: Add to positions, hold shorts from Monday’s short sellers
Thursday (FPI Data: -₹500 cr)
- Flow turning negative
- Action: Don’t add, prepare to exit
Friday (FPI Data: -₹2,000 cr)
- Major reversal confirmed
- Action: Exit all long positions at market open
- Result: Captured ₹200-300 points (2-3%) in week
Advanced: FPI + Order Book + VSA
Combine all three for maximum edge:
- FPI Signal: Positive inflow 5-day average
- Order Book: Bullish imbalance > 2:1 ratio
- VSA: Accumulation pattern on daily chart
If all three align = 92% probability of 2-3% next move
Common Mistakes
Mistake 1: Trading single day FPI
✓ Fix: Use 5-day average, not daily
Mistake 2: Ignoring sector rotation
✓ Fix: Track where FPI is going, not just total amount
Mistake 3: Lagging on data
✓ Fix: Check NSDL by 6:30 PM, trade decision by 9:15 AM next day
Mistake 4: Overtrading every FPI move
✓ Fix: Only trade reversals and 5-day trend changes
FPI/DII Indicators to Build
For automated traders:
FPI Strength Score = (Today's FPI + 2*Avg(FPI 5-day)) / 3
If Score > +1000 = Buy Signal
If Score < -1000 = Sell Signal
If -500 to +500 = Neutral
Key Economic Events Triggering FPI Flows
- Fed Interest Rate Changes: Biggest FPI trigger (1,000+ cr swings)
- Oil Price Shocks: Energy sector FPI moves
- RBI Policy: Domestic rate changes affect FPI
- Global Risk-Off: Emerging market outflows
- Q1/Q2/Q3/Q4 Earnings: Sector-specific flows
- Elections: Political stability concerns
Conclusion
FPI/DII flows are the ultimate market truth. Institutions have better information, better execution, and more capital. By following their flows, you’re following the smart money.
This week’s action:
- Sign up for NSDL daily FPI notifications
- Track FPI for 5 trading days
- Note sector rotations each day
- Paper trade 2-3 setups
- Measure win rate
The traders who win aren’t smarter—they follow the institutional flows and execute at optimal times. Let the FPI data be your guide.