Why Did FIIs Withdraw $2.9 Billion from Indian Equities in July?
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Synopsis
In July, FIIs withdrew an astonishing $2.9 billion from Indian equities, with the IT sector experiencing the most significant outflows. This article delves into the impact of these withdrawals on the market and explores the reasons behind the shift in investment strategies.
Key Takeaways
- FIIs withdrew $2.9 billion from Indian equities in July.
- IT sector faced the largest outflows of $2.3 billion.
- Domestic investors remained active, buying $7.1 billion worth of shares.
- Overall market sentiment shows signs of volatility.
- US tariffs could impact future investment decisions.
Mumbai, Aug 7 (NationPress) A recent report revealed that foreign institutional investors (FIIs) pulled out a staggering $2.3 billion from the IT sector in India during July. The overall net outflow for FIIs amounted to $2.9 billion, contrasting with domestic institutional investors (DIIs), who were net buyers of $7.1 billion in the Indian equity market, as reported by JM Financial Institutional Securities.
The highest FII outflows were recorded in the IT sector at $2.3 billion, followed by the BSFI sector with $671 million. Other sectors such as realty ($450 million), automobile ($412 million), oil and gas ($372 million), and durables ($302 million) also faced notable withdrawals.
On the contrary, inflows were observed in sectors like metals ($388 million), services ($347 million), FMCG ($175 million), telecom ($169 million), and chemicals ($130 million).
The Indian benchmark index, Nifty, experienced a 3 percent drop month-on-month, following a 3.1 percent increase in June 2025. FIIs shifted to net sellers after four months of consistent buying. Up until July 10, they had been net buyers, acquiring equities worth $0.4 billion, but subsequently turned net sellers, offloading equities valued at $3.2 billion for the remainder of the month.
The top five sectors where FIIs held Indian equities included BFSI, IT, energy and gas, automobile, and pharma, collectively accounting for 60 percent of FII holdings.
While pharma and automobile sectors showed slight sequential growth, IT and oil and gas sectors experienced a decline.
On Wednesday, foreign portfolio investors (FPIs) net sold ₹4,999 crore worth of Indian equities, while domestic institutional investors (DIIs) net purchased ₹6,794 crore worth of shares. In a related note, US President Donald Trump announced a new 25 percent tariff on India, escalating total tariffs to 50 percent effective August 27, citing India as a contributor to Russia's war efforts through its imports of Russian crude oil.
Point of View
This situation highlights the delicate balance of foreign investment in India's equity markets. The recent withdrawal by FIIs raises questions about the sustainability of foreign capital inflow and the impact on domestic investors. As the nation navigates these challenges, it's crucial to maintain a focus on strengthening the economic framework to boost investor confidence.
NationPress
05/10/2025
Frequently Asked Questions
What sectors are most affected by FII withdrawals?
The IT sector was the most impacted, experiencing withdrawals of $2.3 billion, followed by BSFI at $671 million, and other sectors like realty, auto, and oil and gas also faced significant outflows.
How did domestic institutional investors respond?
Domestic institutional investors (DIIs) were net buyers, purchasing shares worth $7.1 billion during the same period.
What triggered the FII sell-off?
The sell-off was influenced by a range of factors, including market fluctuations, global economic conditions, and geopolitical tensions, particularly related to tariffs imposed by the US on Indian goods.
What is the current state of the Indian equity market?
The Indian benchmark index Nifty has seen a month-on-month decline of 3 percent following a previous rise of 3.1 percent, indicating volatility in the market.
