FIIs net sold Rs 1 lakh crore in Indian equities since July; trend reversal ahead: Analysts

New Delhi, Sep 13 (IANS) Foreign institutional investors (FIIs) have sold over Rs 1 lakh crore in Indian stocks since July, impacting the market sentiments, but consistent domestic inflows lent support, according to provisional data from stock exchanges.

The sell-off, driven by lacklustre earnings, stretched valuations, and uncertainty over US tariffs, has resulted in range-bound indices.

Between July 1 and September 8, foreign institutional investors sold equities totalling Rs 1.02 lakh crore, with Rs 7,800 crore sold in the first six sessions of September.

Going forward, FIIs are likely to reduce their selling or turn buyers since there are indications of a turnaround in the Indian market due to repo rate cuts and GST reforms, said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

In 2025, foreign institutional investors (FIIs) have net sold Rs 2.18 lakh crore, while domestic institutional investors (DIIs) have countered this with net purchases of Rs 5.37 lakh crore. DIIs have been consistently net buyers in the cash market since August 2023.

FIIs continued selling in September with a sell figure of Rs 11,169 crore up to September 13, as per NSDL data.

Single-digit corporate earnings growth served as a major catalyst for FII outflows. Analysts said that small- and mid-cap valuations remained high in August, while large-caps adjusted towards long-term averages.

"Higher valuations in India compared to markets like China, Hong Kong and South Korea have nudged FIIs to sell in India and buy in cheaper markets. This strategy has worked so far this year since these cheaper markets have hugely outperformed India this year," said Vijayakumar.

India’s GDP growth has rebounded strongly in Q1 and the reforms such as budget tax cuts, rate cuts by the MPC and GST rationalisation have the potential sustain the growth momentum, he said.

Though earnings growth will be modest in the 8 to 10 percent range in FY26, there is a high likelihood of above 15 percent earnings growth in FY27 leading to a turnaround in FPI sentiments, he added.

- -IANS

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