FIIs Sell Rs 90,993 Crore In 2025 So Far, Will Outflows Stop Anytime Soon?

Foreign institutional investors (FIIs) are still on a selling spree, rattled by a mix of domestic and global factors. So far in 2025, till February 7, 2025, FIIs have sold Indian equities worth Rs 90,993 crore, according to data available on Central Depository Services (CDSL).

Out of the 28 sessions so far this calendar year, FIIs have been net sellers in 26 sessions.

Says VK Vijayakumar, chief investment strategist at Geojit Financial Services, “The strength in the dollar index and the high US bond yields continue to force FIIs to sell.”

However, Manoj Purohit, partner and leader, FS tax, tax and regulatory services, BDO India, says, “Despite the macro factors, such as fear of potential tariff and trade curbs, rising inflation risk, currency depreciation, and trade wars looming around, India is well poised and self-insulated by strong measures and timely rate cut measures taken by the RBI to boost domestic investments and consumption, keeping the market buoyancy live.”

The gap between FII and domestic institutional investor (DII) ownerships have been shrinking lately. As of the third quarter of the ongoing financial year, FIIs owned Rs 74.9 lakh crore and DIIs held Rs 73.5 lakh crore worth of Indian equities, according to data from PrimeInfobase. Back in 2015, FIIs held more than twice as much as DIIs.

Will FIIs Return Anytime Soon?

Vijayakumar of Geojit Financial Services says that valuations in India continue to be on the higher side, particularly in the broader market.

“The market needs fundamental triggers like indications on gross domestic product (GDP) growth and earnings rebound. Until then the market is likely to move only in a range. The Delhi election results, particularly the emphatic nature of the BJP win, though positive from the market perspective, are unlikely to trigger a sustained rally in the market,” he says.

“FIIs will continue to sell the rally, restricting any potential upside,” he adds.

On the contrary, JM Financial, in its India Strategy report dated February 8, 2025, says: “BJP’s victory in the recent state elections in Haryana and Maharashtra had allayed fears which had set in after the lower-than-expected mandate in General Elections 2024. The decisive mandate in favour of the BJP in the Delhi assembly election would be sentimentally positive for the markets and could act as a trigger to attract FII flows.”

Aditya Gupta, chief investment officer, Wealthy Nivesh, says, “After the correction seen in the last four months, market valuations particularly in large-caps appear to be attractive. Indian markets still present one of the best risk-reward ratio, so FIIs are not expected to remain short on India for long. The current market presents a good opportunity for the investors to keep buying at dips and get good entry points.”

Purohit, too, concurs the same, vouching that FIIs are poised to make major investments in the Indian market, seeking long-term returns.

He says, “The foreign investor fraternity are all set to take a plunge and invest in the Indian market to get sound, effective net returns from a long-term perspective. The government, too, has echoed these sentiments by simplifying the tax regime, clarifying anomalies on taxation, and extending several tax holidays in IFSC Gift City by another five years to keep the door open for them.”