Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) gave a much-needed boost to the Indian equity markets on April 21, signaling a return of investor confidence. FIIs net bought shares worth Rs 1,970 crore, while DIIs added another Rs 246 crore, marking a rare instance of aligned optimism from both institutional camps.

FII-DII Inflows Break Previous Trend

During the session, FIIs purchased shares worth Rs 11,711 crore and sold shares worth Rs 9,741 crore, resulting in net buying. Meanwhile, DIIs bought Rs 15,619 crore worth of shares and sold Rs 15,373 crore worth, contributing to the net positive tally.

This renewed buying interest comes after a volatile start to the year, where FIIs were net sellers of Rs 1.58 lakh crore. In contrast, DIIs have remained supportive, with net purchases touching Rs 1.99 lakh crore so far in 2025. The reversal in FII sentiment is a critical shift, hinting at possible stability and growth prospects ahead.

Benchmark Indices Soar on Earnings Momentum

The Sensex and Nifty surged for the fifth consecutive session, driven by strong Q4 results from heavyweight banks like ICICI Bank and HDFC Bank. These performances not only boosted sector-specific indices but also lifted overall market sentiment.

• Nifty Bank soared to a record high of 55,461, following stellar quarterly numbers from ICICI Bank, HDFC Bank, and Yes Bank.

• Nifty IT gained 2.5%, led by a surge in Tech Mahindra and HCL Tech shares.

• Nifty Auto, Metal, Oil & Gas, PSU Banks, and Realty indices all rose by over 2%, reflecting broad-based sectoral strength.

FMCG Under Pressure Amid Broader Rally

Despite the overall bullishness, Nifty FMCG dipped nearly 1%, dragged down by major constituents like ITC, Hindustan Unilever (HUL), and Varun Beverages. This underperformance indicates investor rotation out of defensive sectors into cyclical and growth-oriented themes.

Broader Market Participation Indicates Strength

Notably, the broader markets outshined the headline indices:

• Nifty Midcap 100 jumped 2.5%

• Nifty Smallcap 100 rose 2.2%

Analysts believe this shift suggests growing confidence in tier-two and tier-three companies, many of which stand to benefit from improving macroeconomic indicators and a likely stable policy environment.

Macro Tailwinds Fuel Investor Optimism

According to Devarsh Vakil, Head of Prime Research at HDFC Securities, the rally was aided by a combination of easing retail and wholesale inflation data and resilient corporate earnings. This environment sets the stage for policy continuity and market stability, both of which are crucial for sustaining investor enthusiasm.

“This macro tailwind, coupled with healthy corporate earnings—especially from large private banks—helped the benchmark indices maintain upward momentum,” Vakil explained.

Sectoral Highlights

Here’s a snapshot of sector-wise performance on April 21:

What This Means for Investors

The alignment of FII and DII buying signals a recalibration of risk appetite, and the fifth straight session of gains reflects growing optimism that the market may be entering a sustainable bullish phase. With the earnings season in full swing, upcoming results will determine whether this rally has legs or if a consolidation phase looms.

Technical and Sentiment Outlook

Technical analysts suggest that if Nifty sustains above 22,600 and Sensex holds above 74,500, a fresh leg of rally toward new lifetime highs could unfold. However, investors should remain cautious, given potential volatility from global cues like US interest rate trends, geopolitical developments, and crude oil fluctuations.

Conclusion

The resurgence of institutional buying, strong banking earnings, and macro tailwinds like falling inflation have combined to provide a powerful lift to Indian equity markets. While FMCG and defensive sectors lagged, the rally in banks, IT, autos, and midcaps suggests a broadening of market participation. The next few sessions will be critical in determining whether this is a short-term bounce or the beginning of a long-term uptrend.

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