Key Points

FIIs have been net sellers for most of 2025, and this trend continues in August, which has seen substantial outflows despite occasional daily inflows.

“When we examine the data for secondary and primary market inflows, it becomes evident that FIIs are still participating in the primary market. This indicates their ongoing investment in new themes and businesses, while they are reducing their exposure to sectors that are experiencing slower growth,” said Vipul Bhowar, Senior Director, Head of Equities, Waterfield Advisors.

Meanwhile, domestic institutional investors (DIIs) have become steady buyers, supported by strong retail and SIP inflows.

As per data with the depositories, foreign investors offloaded Indian equities worth nearly Rs 21,000 crore in the first half of August amid global uncertainties. With this, the total outflow by Foreign Portfolio Investors (FPIs) in equities reached the Rs 1.16 trillion mark so far in 2025.

Market watchers attribute the outflows to US tariff concerns, weak Q1 corporate earnings, and rupee depreciation, which have weighed on investor sentiment.

However, the FII selling is abating after the current rating action by S&P Global. S&P India's projection for real GDP growth at 6.5 per cent is on the more pragmatic side when compared to other forecasts.

The rating agency also predicted that US tariffs will have an overall marginal impact and will not derail India's long-term growth prospects.

This is because, with sectoral exemptions on pharmaceuticals and consumer electronics, the exposure of Indian exports subjected to tariffs is lower at 1.2 per cent of GDP, according to an SBI Research report.

S&P Global Ratings, in its latest report, raised its long-term sovereign credit ratings on India to BBB from BBB– in August 2025 with a stable outlook.

The rating action hinges on three fundamental observations— credible fiscal consolidation, strong external position and well-anchored inflationary expectations.

—IANS

- IANS