Decline in FII Selling in Indian Market, Stabilization Expected Next Quarter: Experts
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Synopsis
FII selling in India is decreasing as stock valuations improve. Experts predict stabilization in FII flows in the upcoming quarter, contingent on earnings growth. Despite previous outflows, market sentiment remains cautious amid global trade uncertainties.
Key Takeaways
- FII selling in India is declining.
- Equity sales for March total Rs 30,015 crore.
- FIIs have been net buyers in the debt segment.
- Market volatility is expected to continue.
- Nifty valuations are below the 10-year average.
New Delhi, March 16 (NationPress) The trend of Foreign Institutional Investors (FIIs) selling in India persists in early March; however, the pace of these sales is gradually diminishing as stock market valuations appear more attractive, experts say.
As of March 14, FIIs have offloaded equities worth Rs 30,015 crore this month, bringing the cumulative equity sold in CY 2025 to Rs 1,42,616 crore.
In contrast, the debt segment has seen FIIs as net buyers in March thus far, with total purchases (including general category and VRR) reaching Rs 7,029 crore, according to market analysts.
Nevertheless, the increased uncertainty stemming from the trade conflict between the United States and other countries may drive more capital into safer asset classes such as gold and the dollar, they noted.
As per Shridatta Bhandwaldar, Head of Equities at Canara Robeco Mutual Fund, FIIs have been prominent sellers in the Indian equity market over the last three months, resulting in outflows between $15-20 billion.
“However, as the initial turmoil dissipates, we anticipate FII inflows to stabilize in the upcoming quarter and potentially turn positive over time,” he stated.
“For this shift to occur, our earnings must exhibit significant improvement from current levels. We believe the slowdown in earnings growth is more cyclical than structural, similar to trends observed in FY23,” he added.
Currently, valuations for the Nifty index are already below its 10-year average for one-year forward earnings.
In the last week, Indian stock markets remained predominantly range-bound, closing slightly lower amid a backdrop of mixed global signals and cautious investor sentiment.
The benchmark indices experienced minor corrections as worries over global trade policies and sector-specific sell-offs affected market mood.
Analysts foresee ongoing volatility in the coming sessions as investors monitor global developments, especially economic data releases from the U.S. Federal Reserve and local macroeconomic indicators.
While the 22,250-22,650 range remains a critical technical zone for the Nifty 50, a breakout in either direction could dictate the market's near-term direction, according to market experts.
