FIIs Turn Net Buyers After Nine Sessions of Selling – Is This a Trend Reversal?
Foreign Investors Return After Heavy Selling
FIIs : After nine consecutive sessions of relentless selling, Foreign Institutional Investors (FIIs) finally turned net buyers in the Indian stock market. On February 18, 2025, FIIs purchased shares worth ₹4,787 crore, breaking their selling streak. However, this buying spree was primarily due to the Airtel block deal worth ₹5,130 crore. The crucial question now is: Does this indicate a shift in FII sentiment, or is it just a temporary break before another round of selling?
FII Selling Trend Over the Past Few Months
Foreign investors have been aggressively offloading Indian equities since October 2024, driven by global economic factors and local market concerns. The monthly sell-off data paints a clear picture of their bearish stance:
| Month | FII Net Outflow (₹ Crore) |
|---|---|
| October | 1,14,446 |
| November | 45,974 |
| December | 16,982 |
| January | 87,375 |
| February (Till Date) | 28,335 |
This continuous selling has put significant pressure on the stock market, dragging indices lower over the past few months.
How Domestic Institutional Investors (DIIs) Supported the Market
While FIIs were exiting, Domestic Institutional Investors (DIIs) played a critical role in stabilizing the market. DIIs have consistently provided support by absorbing the selling pressure and investing heavily:
| Month | DII Net Inflow (₹ Crore) |
|---|---|
| October | 1,07,225 |
| November | 44,484 |
| December | 34,195 |
| January | 86,592 |
| February (Till Date) | 33,851 |
This counterbalance helped limit sharp declines, ensuring the market didn’t experience a steeper crash.
Why Are FIIs Selling Indian Stocks?
Several global and domestic factors have contributed to the sustained selling by FIIs:
- Strengthening US Dollar – A strong US dollar has made emerging markets less attractive for foreign investors. Higher interest rates in the US have encouraged capital outflows from riskier markets like India.
- High Valuations – The Indian stock market has been trading at a premium compared to other emerging markets, making FIIs wary of investing at elevated prices.
- Corporate Earnings Slowdown – Concerns over the slower-than-expected earnings growth of Indian companies have prompted FIIs to book profits and reduce exposure.
- Global Uncertainty – Ongoing geopolitical tensions, US Fed policy decisions, and concerns over global economic stability have made investors cautious about emerging markets.
Impact on the Indian Stock Market
The FII sell-off has weighed heavily on Indian equities. The market has witnessed a sharp correction from its 52-week highs across major indices:
| Index | 52-Week High | Current Level | Decline (%) |
|---|---|---|---|
| Nifty 50 | 26,277 | 22,926 | 12.70% |
| Nifty Small Cap 250 | 18,688 | 14,542 | 22.22% |
| Nifty Mid Cap 100 | 60,926 | 48,071 | 21.12% |
This decline indicates the significant impact of FII outflows on market sentiment and investor confidence.
Will FIIs Continue Buying or Resume Selling?
While the recent FII buying is a positive sign, it might not be enough to indicate a complete trend reversal. The Airtel block deal contributed significantly to the net buying figure, and without sustained inflows in the coming weeks, FIIs could return to selling mode.
What Could Drive FIIs Back to Indian Markets?
- US Fed Policy Shift – If the Federal Reserve hints at rate cuts, it could weaken the US dollar, making emerging markets attractive again.
- Earnings Recovery – A revival in corporate earnings could renew investor confidence and attract fresh foreign inflows.
- Attractive Valuations – If Indian stock valuations cool down, FIIs might see this as an opportunity to re-enter.
- Stable Global Markets – Any signs of easing geopolitical tensions or a positive global economic outlook could encourage FIIs to return.
Conclusion
The recent FII buying after nine sessions of selling is a welcome development for the Indian stock market. However, it is too early to call it a trend reversal, especially since the bulk of the net buying was driven by a single block deal. Investors should closely monitor upcoming global economic events, FII activity in the coming weeks, and corporate earnings data to assess whether foreign investors will continue their buying streak or resume selling.
For now, DIIs remain the backbone of the Indian market, providing stability amid the FII exodus. If foreign investors do return, it could mark the beginning of a fresh bull run, but caution is advised before assuming that the worst is over.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.