India, Dec. 26 -- It is not incorrect to say that not long ago, the Indian stock market lived and died by the mood of foreign investors. Often when Foreign Institutional Investors (FIIs) dumped Rs.3,000-4,000 crore in a single session, the Sensex could fall drastically and the Nifty would bleed. Conversely, a gush of foreign inflows could spark instant euphoria on Dalal Street. For decades, Indian markets were like the puppets who danced to the tune of FIIs, the puppeteers. During my investment banking days, we vigorously monitored the movements of FIIs. A whiff of tightening by the US Federal Reserve, a jump in US bond yields, or a geopolitical tremor would ripple through Mumbai within minutes. We lived in an uncertain world as far as the markets were concerned. It will be misleading to say that that era has vanished entirely. But it is no longer dominant. The Indian stock market of 2025 is structurally different. Thanks to the Modi government's policies, it is more resilient and more self-assured, and far less skittish. The gravitational centre of Indian equities has shifted, perhaps irreversibly. Foreign capital still matters, but it no longer commands the sentiments of the Dalal Street. The new custodians of market stability are domestic - the Indian household, domestic mutual funds, insurance money and long-term institutional capital. The steady growth in the salaried systematic investment plan (SIP) contributions has been one of the strongest factors for the Indian stocks being far less dependent on FIIs. It did not happen organically. The people who earlier parked their savings in fixed deposits or in gold are now investing in instruments such as SIPs. The mindset changed because of a chain reaction set off by digitisation. Earlier, we felt intimidated by lots of paperwork, middlemen and physical visits. Today, the average Indian is a confident investor; digitisation broke barriers. Financial inclusion has been implemented across the nation and strata of society. Jan Dhan accounts brought millions into the formal system. Direct Benefit Transfers created trust. The UPI revolution normalised digital money. Under Prime Minister Modi's digitisation initiatives, Sebi and RBI's investor awareness campaigns chipped away at fear. The government's mass communication efforts like "Mutual Funds Sahi Hai", coupled with intuitive fintech platforms, such as Zerodha and Upstox, made investing accessible, even routine. The middle class is no longer parking surplus savings only in gold and real estate. It is investing in India's growth story. Nowhere is this clearer than in the explosion of SIPs. In September, people invested over Rs.24,500 crore through SIPs, the highest monthly amount ever, and a clear jump from August. This surge came from millions of new investors joining the system. Over 66 lakh new SIPs were started in just one month, taking the total number of active SIP accounts to nearly Rs.9.5 crore. The average SIPs in 2025 touched Rs.30,000 crore per month. It shows that Indians are steadily committing long-term savings to the stock market rather than pulling out during ups and downs. In short, small monthly investments by ordinary households are now a powerful force in India's markets. They are steady, patient and growing. They are changing how the stock market behaves. The stabilising factor for the stock market is that SIPs arrive every month, through bull runs and bear phases, through wars and rate hikes, through panic and exuberance. This steady stream of capital has fundamentally altered the market's liquidity architecture. SIP investors do not panic when FIIs exit. They do not react to geopolitical headlines. Their money shows up, month after month, providing depth and resilience. One institution that rarely gets its due credit in this transformation is the Life Insurance Corporation of India (LIC). LIC is not officially a sovereign wealth fund, but it behaves like one. With its vast pool of long-term capital and patient investment horizon, LIC has repeatedly acted as a stabiliser during periods of volatility. It steps in when sentiment weakens, provides liquidity when it is scarce, and supports strategic assets when needed. Alongside EPFO, domestic mutual funds and insurance capital, it forms the backbone of India's financial shock absorbers. This fits neatly into the broader logic of the Atmanirbhar Bharat drive. India's own institutions are now driving capital formation. This is self-reliance through financial muscle, not protectionism. So, have FIIs stepped back? To a large extent yes. But it has little to do with a loss of faith in India. Global capital is restless, opportunistic and impatient. In recent years, foreign investors have been chasing the Artificial Intelligence boom centred in the US, where capital has clustered around a handful of mega-cap technology and semiconductor names. Others have moved to markets such as Japan, parts of Latin America and select European economies. There is also a regulatory angle that deserves attention. Since 2023, Sebi has tightened oversight of leveraged and speculative derivatives trading. Risky structures have been dismantled and excessive leverage curbed. As a result, a significant amount of short-term, speculative foreign capital has exited the derivatives segment. This was policy by design. This regulatory tightening has also played an under-appreciated role in reshaping market behaviour. Will FIIS make a comeback? Almost certainly. Global capital is cyclical. When western bond yields soften, risk appetite returns and valuations recalibrate, foreign investors will come back with force. India remains one of the world's most stable, scalable and sustainable growth stories. What will not return is the old hierarchy. FIIs may once again become large buyers, but they are unlikely to regain their former dominance. The psychological power has shifted. Domestic investors now set the tempo. Foreign flows will increasingly react to India rather than dictate its direction. That is a profound change. It signals maturity and confidence. It signals a market that no longer flinches at every foreign footstep. India's stock markets are grown-ups now. And like all grown-ups, they listen to the world, but they do not live in fear of it....