Even as long-term interest via primary issuances remains intact, the near-term stance of FIIs has weighed on market sentiment.
The broader equity market has seen volatility as FIIs redirect allocations to global peers that have outperformed India in recent months. Despite this, domestic inflows and IPO-related participation have supported underlying market activity. The pattern of foreign flows underscores a divergence between long-term structural investments and short-term repositioning within global portfolios.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, “The selling by FIIs accelerated on the last few days of the week, and the total FII sell figure for November up to 14th November stood at Rs 13,925 crores.” He added that despite the selling in the secondary market, long-term allocations through public offerings continue: “The long-term trend of FII buying/investing through the primary market continues with an investment of Rs 7833 crores so far in November.”
Sharing further details from NSDL, he noted, “For 2025, till now, total FII sell figure through exchanges stands at Rs 2,08,126 crores. And the total buy figure for the primary market stands at Rs 62125 crores.”
Vijayakumar also pointed to India’s relative performance versus global markets as a driver of the rotation in FII flows. As he explained, “The underperformance of India vs other markets has accelerated the momentum sell trade in India and buy trade in other markets, particularly those like US, China, Taiwan and South Korea which are widely regarded as the beneficiaries of the ongoing AI trade.”He further added, “However, this AI trade cannot continue for long since there are concerns of a bubble building up in AI stocks. When the AI trade loses steam, India will attract FII inflows. The timing of this is difficult to predict.”Additional insights on foreign flows come from Manoj Purohit, Partner & Leader, Financial Services Tax, Tax & Regulatory Services, BDO India. Commenting on recent trends, he said, “Foreign inflows have witnessed continuous volatility with some sign of recovery in coming times. Major factors contributed to this positive shift are the record domestic sales during this festive month, sustained corporate earnings growth, ongoing talks on India-US trade deals.”
He also highlighted the role of regulators, stating, “Regulators are also playing a pivotal role to ensure that the concerns of the offshore investor fraternity on easing regulatory parameters and compliance burden is put in place to ease the access into India market and deepen the market participation.”
Purohit outlined several SEBI proposals aimed at streamlining investor processes, noting that “SEBI’s key proposal announcements include aligning KYC review timelines with RBI norms, eliminating the need for trading and demat accounts, and removing requirements to furnish investor group details for certain categories.” Measures such as broadening anchor investor limits and allowing IFSC-based retail schemes to register as FPIs were also highlighted as key steps.
He further added that SEBI’s new one-stop digital platform could play a meaningful role in improving market accessibility, saying, “Further, the SEBI has also recently launched a single-window digital platform – ‘India Market Access’ for providing all the required information on India market and regulations for the international institutions eyeing India capital market as a preferred destination for making portfolio investments.” According to him, these changes aim to “reduce administrative burdens, encourage greater participation, and align India’s regulatory environment with the global best practices.”
As global themes, macroeconomic shifts, and regulatory developments shape foreign flows, analysts suggest that tracking FII positioning will remain crucial for understanding near-term market dynamics.
Also read: Gold plunges Rs 5,000/10 gram, silver tanks Rs 8,700/kg. 3 reasons for yellow metal’s sharpest intraday slide
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
