New Delhi, Dec 27 (NationPress) Strong GDP expansion and the potential for better corporate earnings in the upcoming year are seen as encouraging factors for foreign institutional investor (FII) inflows in 2026, analysts indicated on Saturday, even as the selling total for December surpassed Rs 22,130 crore.

In the calendar year 2025, FIIs have net sold shares amounting to Rs 1,58,407 crore, which represents their most substantial selling since initiating investments in India. Nevertheless, analysts have noted early signs of a potential reversal in FII outflows, driven by macroeconomic stability and enhanced earnings visibility.

As 2025 approaches its end, Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., remarked, "FII selling in India is poised to reach unprecedented levels this year."

Throughout 2024, FIIs have been active in selling through exchanges, totaling Rs 1,21,210 crore in equities. However, net inflows for the year remained positive, as they also invested Rs 1,21,637 crore in the primary market. The net sales figure for 2025, however, has turned out to be significant.

Dr. Vijayakumar pointed out that the ongoing FII selling has played a crucial role in the notable depreciation of the INR this year, but an improvement in economic fundamentals could attract net FII inflows by 2026.

Analysts highlighted that persistent FII selling, coupled with a high trade deficit, has significantly impacted the rupee's depreciation in 2025.

The rupee has depreciated by approximately 5 percent annually and experienced a slight dip on Friday amidst a rebound in crude oil prices. In the interim, Net foreign direct investment (FDI) in India nearly doubled to $6.2 billion during the April-October period, up from $3.3 billion the previous year, primarily due to a decrease in foreign capital repatriation despite an uptick in outward FDI, according to an official statement.

Gross inward FDI saw a minor increase to $58.3 billion during April-October, compared to $50.5 billion a year prior. The repatriation of foreign capital leaving India declined to $31.65 billion from $33.2 billion during the same timeframe.

A recent analysis from Emkay Global Financial Services suggested that the rupee's weakness could deter foreign portfolio investors (FPIs), with anticipated returns only likely after the currency stabilizes for a sustained period (1-2 months).

The report emphasized that FPIs maintain a strong focus on large-cap stocks, with a notable overweight position in the Financials sector.