FIIs offload ₹11,820 crore in Indian stocks during the first week of December: What it means for the market

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Economic Times, click this post to read the original article.

Foreign Institutional Investors (FIIs) have maintained their selling trend in early December, offloading Indian equities worth Rs 11,820 crore. This brings their total sales for the year to Rs 1,55,495 crore. On a recent Friday, FIIs sold shares valued at Rs 439 crore, while Domestic Institutional Investors (DIIs) acted as net buyers, purchasing Rs 4,189 crore. Despite the ongoing sell-off by FIIs, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that the strong buying activity from DIIs has overshadowed these outflows, with DIIs investing Rs 19,783 crore during the same period.

Vijayakumar attributed the FII selling primarily to the Indian rupee’s depreciation of about 5% this year, which often prompts foreign investors to withdraw their investments. Conversely, DIIs have been consistently investing due to steady fund flows and optimism surrounding robust GDP growth and anticipated increases in corporate earnings. In December, the trend of foreign portfolio outflows continued, although at a slower pace than in November, following a significant inflow of Rs 14,610 crore in October.

In the third quarter of CY25, FIIs sold shares worth Rs 76,619 crore, reversing the trend seen earlier in the year when they had net inflows of Rs 38,673 crore between April and June. The year began on a negative note for foreign investors, with a substantial withdrawal of Rs 1,16,574 crore in the first quarter. Vijayakumar expects the selling trend to persist, as market valuations are still viewed as elevated. He highlighted that fluctuations in the market could occur in response to various news events, such as potential trade agreements between India and the US.

Additionally, the recent 25 basis points rate cut by the Reserve Bank of India and plans for significant liquidity infusion have positively influenced market sentiment. Vijayakumar praised the central bank’s pro-growth approach, suggesting that with supportive fiscal and monetary policies, alongside signs of accelerating earnings growth, DIIs are likely to continue their buying momentum.