Will FII Selling Decline as Domestic Buyers Surge?
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Synopsis
As we look into December, foreign institutional investors have sold equities worth Rs 15,959 crore, while domestic institutional investors have stepped in, purchasing Rs 39,965 crore. This dynamic reflects a shifting landscape in India's investment climate, driven by positive economic indicators and robust mutual fund inflows.
Key Takeaways
- FIIs sold equities worth Rs 15,959 crore in December.
- DIIs purchased Rs 39,965 crore during the same period.
- Steady SIP inflows are crucial for market stability.
- Economic growth and earnings forecasts are promising.
- Market dynamics are influenced by FII and DII activities.
Mumbai, Dec 14 (NationPress) Analysts are predicting a reduction in foreign institutional investor (FII) selling in the upcoming days due to the robust performance of the economy, enhanced earnings growth outlook, and strong mutual fund SIPs. So far in December, FIIs have divested equities valued at Rs 15,959 crore through the exchanges.
This selling activity has been overshadowed by the domestic institutional investors (DIIs), who have made purchases totaling Rs 39,965 crore during the same timeframe, according to market analysts.
“Continuing to sell in India when growth and earnings potential are promising is not a long-term strategy,” noted Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.
A noteworthy trend among retail investors is the consistent inflow into mutual fund SIPs, which have remained above Rs 29,000 crore over the past three months.
In November, SIP inflows were nearly unchanged at Rs 29,445 crore, based on data from the Association of Mutual Funds in India (AMFI).
According to Vijayakumar, this trend has allowed the DIIs to mitigate the impact of the ongoing selling by FIIs.
“FIIs have been persistent sellers throughout December, but maintaining a high short position while facing robust SIP inflows will be challenging, especially given the positive economic climate and improving earnings forecasts,” he added.
Market analysts also emphasize that factors such as rupee depreciation, ongoing FII selling, delays in finalizing the US-India trade deal, and the ongoing AI trade represent temporary challenges for the markets.
In November, both FIIs and DIIs were net buyers in the Indian equity market, with purchases amounting to $40 million and $8.7 billion, respectively.
Over the past year, the Indian primary market has experienced FII net inflows of Rs 823 billion ($9.5 billion), while secondary markets noted FII net outflows of Rs 2,144 billion ($24.5 billion), as reported by JM Financial.
In November, India's weight in the MSCI Emerging Markets Index increased to 15.8%, up from 15.2% in October and 19.9% in November.
Analysts affirm that the crucial element influencing market direction will be earnings growth, which appears promising for FY27.
Point of View
We observe the significant role of both FIIs and DIIs in shaping the Indian equity market dynamics. While the FII selling trend raises concerns, the robust buying by DIIs indicates a resilient investment environment, reflecting confidence in India's economic recovery. Our analysis suggests a cautious optimism as we navigate these changes.
NationPress
14/12/2025
Frequently Asked Questions
What are the current trends in FII and DII investments?
In December, foreign institutional investors have sold equities worth Rs 15,959 crore, while domestic institutional investors have bought a total of Rs 39,965 crore, indicating a shift in market dynamics.
How do mutual fund SIPs impact market movements?
Steady inflows from mutual fund SIPs, consistently above Rs 29,000 crore, provide a buffer against FII selling, allowing domestic investors to absorb market fluctuations.
What factors could influence future investment patterns?
Key factors include economic growth prospects, earnings forecasts, rupee depreciation, and geopolitical developments like the US-India trade deal.
