Foreign Institutional Investor (FII) selling in India continues in early March, but the intensity of the sell-off is gradually declining as stock market valuations become more reasonable, according to experts.
As of March 14, FIIs have sold equity worth ₹30,015 crore this month, taking the total equity sold in CY 2025 so far to ₹1,42,616 crore.
In contrast, FIIs have turned buyers in the debt segment in March. The total buying figure for debt (general category plus VRR) stood at ₹7,029 crore so far this month, say market watchers.
However, experts noted that heightened uncertainty stemming from the ongoing trade war between the US and other nations is likely to push more investments towards safe asset classes such as gold and the US dollar.
Shridatta Bhandwaldar, Head of Equities at Canara Robeco Mutual Fund, highlighted that FIIs have been significant sellers in the Indian equity market over the past three months, with outflows amounting to $15–20 billion.
“However, as the initial shocks subside, we expect FII flows to at least stabilise in the next quarter and eventually turn positive over time,” he said.
“For this to materialise, though, our corporate earnings will need to show substantial improvement from current levels. We believe the slowdown in earnings growth is more cyclical than structural, noting that a similar trend was observed in FY23,” he added.
Valuations for the Nifty index are already below its 10-year average for one-year forward earnings.
Meanwhile, Indian stock markets remained largely range-bound last week, ending slightly lower amid mixed global cues and investor caution.
The benchmark indices experienced mild corrections as concerns over global trade policies and sector-specific sell-offs weighed on market sentiment.
Analysts expect volatility to persist in the upcoming sessions as investors monitor global developments, particularly economic data releases from the US Federal Reserve and domestic macroeconomic indicators.
Market experts pointed out that the 22,250–22,650 range remains a crucial technical zone for the Nifty 50. A breakout in either direction could determine the market’s trajectory in the near term.
(Reuters)
