NewKerala.com

Key Points

Foreign institutional investors have been heavy sellers in Indian equities since July, offloading over Rs 1 lakh crore. The selling was driven by high valuations compared to other markets and modest corporate earnings growth. However, domestic institutional investors have provided strong counter-support with massive purchases. Analysts now see potential for a trend reversal due to economic reforms and expected earnings growth improvement.

Key Points: FIIs Sell Rs 1 Lakh Crore Indian Equities Since July Analysts See Reversal

  • FIIs net sold Rs 1.02 lakh crore since July driven by stretched valuations
  • Domestic investors countered with Rs 5.37 lakh crore purchases supporting markets
  • Analysts see potential reversal due to repo rate cuts and GST reforms
  • FY27 could bring above 15% earnings growth reversing FII sentiment
2 min read

FIIs net sold Rs 1 lakh crore in Indian equities since July; trend reversal ahead: Analysts

Foreign investors sold over Rs 1 lakh crore in Indian stocks since July due to high valuations and weak earnings, but analysts predict a trend reversal ahead.

"Higher valuations in India compared to markets like China, Hong Kong and South Korea have nudged FIIs to sell in India and buy in cheaper markets. - VK Vijayakumar, Geojit Investments"

New Delhi, Sep 13

Foreign institutional investors (FIIs) have sold over Rs 1 lakh crore in Indian stocks since July, impacting the market sentiments, but consistent domestic inflows lent support, according to provisional data from stock exchanges.

The sell-off, driven by lacklustre earnings, stretched valuations, and uncertainty over US tariffs, has resulted in range-bound indices.

Between July 1 and September 8, foreign institutional investors sold equities totalling Rs 1.02 lakh crore, with Rs 7,800 crore sold in the first six sessions of September.

Going forward, FIIs are likely to reduce their selling or turn buyers since there are indications of a turnaround in the Indian market due to repo rate cuts and GST reforms, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

In 2025, foreign institutional investors (FIIs) have net sold Rs 2.18 lakh crore, while domestic institutional investors (DIIs) have countered this with net purchases of Rs 5.37 lakh crore. DIIs have been consistently net buyers in the cash market since August 2023.

FIIs continued selling in September with a sell figure of Rs 11,169 crore up to September 13, as per NSDL data.

Single-digit corporate earnings growth served as a major catalyst for FII outflows. Analysts said that small- and mid-cap valuations remained high in August, while large-caps adjusted towards long-term averages.

"Higher valuations in India compared to markets like China, Hong Kong and South Korea have nudged FIIs to sell in India and buy in cheaper markets. This strategy has worked so far this year since these cheaper markets have hugely outperformed India this year," said Vijayakumar.

India’s GDP growth has rebounded strongly in Q1 and the reforms such as budget tax cuts, rate cuts by the MPC and GST rationalisation have the potential sustain the growth momentum, he said.

Though earnings growth will be modest in the 8 to 10 percent range in FY26, there is a high likelihood of above 15 percent earnings growth in FY27 leading to a turnaround in FPI sentiments, he added.

- -IANS

- IANS

Share this article:

Reader Comments

P
Priya S
The resilience of DIIs is impressive! While FIIs are selling, our domestic institutions are showing confidence in Indian economy. This shows we're becoming less dependent on foreign money 💪
A
Arjun K
Single digit earnings growth is the real concern here. Companies need to focus on fundamentals rather than just valuations. Hope the reforms mentioned actually translate to better corporate performance.
S
Sarah B
As someone who invests in both Indian and Chinese markets, I can confirm the valuation gap is significant. However, India's growth story remains strong long-term. This might be a good entry point for patient investors.
V
Vikram M
The consistent buying by DIIs shows that Indian investors have matured. We're not panicking because foreigners are selling. This is actually healthy for the market in the long run.
M
Michael C
While the article is optimistic about turnaround, I think we need to be cautious. Global uncertainties and US tariffs could continue to pressure FII flows. The repo rate cuts need to be substantial to make a real difference.
A
Ananya R
This is actually good news for retail investors! Markets were getting too expensive. Now we can accumulate quality stocks at better valuations. Time to think long-term rather than worry about short-term FII movements 📈

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50