Why Did FIIs Invest ₹40,305 Crore in Equity Despite Selling?
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Synopsis
In a surprising twist, FIIs have invested ₹40,305 crore in equity this August amidst a selling frenzy. Despite market turbulence and valuation concerns, India's economy is poised for significant growth. Dive into the factors driving this investment and what it means for the future.
Key Takeaways
- FIIs invested ₹40,305 crore in equity this August.
- High valuations in India are prompting FIIs to seek opportunities elsewhere.
- India’s GDP growth is accelerating towards 7.8%.
- Upcoming economic indicators will influence market sentiment.
- FIIs have been consistent buyers in the primary market despite selling in exchanges.
Mumbai, Aug 31 (NationPress) In a surprising turn of events, foreign institutional investors (FIIs) have purchased equity worth ₹40,305 crore this month through the primary market, despite significant selling in the exchanges, according to analysts on Sunday. Current valuations of IPOs are deemed fair, making them attractive.
However, fluctuations in tariff policies and exchange rates are influencing FII behavior, leading to potential volatility in the short term, as noted by Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.
Throughout August, FIIs have continued their selling trend, accumulating a total of ₹39,063 crore in sales through exchanges. This brings the total FII selling for 2025 to an alarming ₹170,940 crore, following ₹121,210 crore in 2024.
Vijayakumar explains that this extensive selling is primarily due to relatively high valuations in India compared to other markets, prompting FIIs to seek better opportunities elsewhere.
Importantly, he highlights that FIIs have been consistent buyers in the primary market for an extended period.
The uncertainty surrounding tariff regulations is a prevailing sentiment in the market, which is constraining risk appetite and overshadowing otherwise stable trading patterns.
On a brighter note, India is progressing towards becoming the world’s third-largest economy by 2030, with a projected GDP of $7.3 trillion.
Estimates suggest that India will reach a GDP of ₹4,26,45,000 crore (approximately $5 trillion) by 2027 and is on track to surpass Germany by 2028. According to government data, by 2030, India is expected to achieve this remarkable milestone.
Additionally, India's GDP growth rate surged to 7.8% in the first quarter (April-June) of this fiscal year, compared to 6.5% during the same period in FY 2024-25, according to data released by the Ministry of Statistics.
Market analysts view this as positive news for investors moving forward.
The upcoming week is set to be eventful as it marks the beginning of a new month, with multiple high-frequency indicators scheduled for release.
Investors will closely monitor auto sales data, along with HSBC Manufacturing, Services, and Composite PMIs. Furthermore, the GST Council meeting is anticipated to be a focal point, with expectations building for accelerated implementation of proposed reforms based on industry body demands, as stated by Ajit Mishra, SVP of Research at Religare Broking Ltd.
These developments are expected to shape the near-term market sentiment. A cautious yet balanced strategy is recommended as we approach this macro-focused week.
Point of View
It is crucial to recognize that while FIIs are navigating a complex landscape marked by high valuations and tariff uncertainties, their continued investment in the primary market reflects confidence in India's long-term growth trajectory. Our nation is poised for remarkable developments, and it's essential for investors to remain informed and strategic in their decisions.
NationPress
31/08/2025
Frequently Asked Questions
What are FIIs and why do they matter?
Foreign Institutional Investors (FIIs) are investment funds from outside the country that invest in the domestic financial markets. They play a crucial role in providing liquidity and boosting confidence in the market.
What factors are influencing FII behavior currently?
FIIs are influenced by tariff policy changes and exchange rate fluctuations, which create volatility and impact their investment strategies.
Why are FIIs investing in the primary market?
The primary market offers fair valuations for IPOs, which are attractive to FIIs despite the selling pressure in the secondary market.
What is India's projected GDP growth?
India is projected to achieve a GDP of ₹4,26,45,000 crore ($5 trillion) by 2027 and aims to become the world's third-largest economy by 2030 with a GDP of $7.3 trillion.
What should investors watch for in the upcoming weeks?
Investors should monitor auto sales data, PMI reports, and the GST Council meeting, as these events will shape market sentiment and investment strategies.
