FII Selloff: Rs 10,169 Crore Withdrawn from Companies in Just 5 Days
Foreign Institutional Investors (FIIs) have significantly increased their selling of Indian equities, pulling out a staggering ₹10,169 crore over five consecutive sessions leading up to July 17. This trend marks a notable shift after three months of net buying, pushing the total outflows for July past the $1 billion mark. The most substantial selling occurred on July 11, with FIIs offloading ₹4,495 crore, followed by another significant exit of ₹3,671 crore on July 17, indicating a concerning trend for the Indian market.
Recent Trends in FII Activity
The recent wave of selling by FIIs has raised alarms among market analysts. Data shows that the outflows have been consistent, with daily figures reflecting a growing trend of withdrawal. On July 16, FIIs sold ₹1,041 crore, and on July 15, the outflow was ₹174 crore. The selling spree began to escalate on July 14, with ₹789 crore withdrawn, culminating in the peak on July 11. This pattern of selling has contributed to a broader trend of FII outflows, which have now reached nearly ₹90,000 crore in 2025. This trend reflects a cautious global sentiment among investors, as they reassess their positions in the Indian market.
Domestic Investors Provide Support
Despite the heavy selling by FIIs, Domestic Institutional Investors (DIIs) have stepped in to provide some stability to the market. Over the same period, DIIs have invested nearly ₹11,000 crore, helping to cushion the impact of the foreign exodus. This support has been crucial in preventing more severe corrections in the market amid rising volatility. The contrasting actions of FIIs and DIIs highlight the complex dynamics at play in the Indian equity market, where domestic investors are attempting to offset the negative sentiment created by foreign withdrawals.
Market Performance and Analyst Insights
The recent FII selling has coincided with a decline in the Nifty index, which has dropped by 1.6% in July. Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that the selling by FIIs has been a significant factor in this downturn. He pointed out a clear pattern in FII activity this year, where they initially sold in the first quarter, turned buyers in the second quarter, and are now back to selling in July. This cyclical behavior raises concerns about the overall market outlook unless positive developments emerge to reverse the current trend.
Global Perspectives on Indian Equities
Adding to the cautious sentiment, global brokerage firm Citi has downgraded India’s equity rating from ‘overweight’ to ‘neutral.’ The firm cited stretched valuations and a moderating earnings growth outlook as key reasons for this shift. Citi emphasized that India remains the most expensive market compared to its peers, trading at 23 times earnings. While the macroeconomic outlook for India appears favorable, the high valuations and subdued earnings growth expectations could deter further investment from FIIs. This perspective underscores the challenges facing the Indian market as it navigates through a period of uncertainty and volatility.
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