Will FPI Selling Slow Down Amid Improved Earnings?
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Synopsis
As Indian earnings are anticipated to rise in FY27, foreign portfolio investors may cut back on their selling activities. This article explores the latest trends and insights from analysts regarding FPI strategies in the evolving market landscape.
Key Takeaways
- FPI selling is expected to slow down with improved earnings forecasts.
- In September, FPIs recorded sales of Rs 27,163 crore.
- The long-term buying trend in the primary market continues.
- Investors should adopt a buy-on-dips strategy.
- Focus on fundamentally strong companies in broader markets.
New Delhi, Oct 4 (NationPress) As the valuation gap narrows and Indian earnings are projected to gain momentum in FY27, analysts suggest that foreign portfolio investors (FPIs) may reduce their selling activities in the near future.
In September, FPIs continued their trend of sustained selling, with total sales through exchanges reaching Rs 27,163 crore.
However, aligning with the long-term buying trend in the primary market, they purchased equities worth Rs 3,278 crore during the same month.
“The selling in September brings the total for 2025 to Rs 198,103 crore. This substantial selling adds to the Rs 121,210 crore from 2024, totaling Rs 319,313 crore of FII sales over the last 21 months,” stated Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.
The higher valuations in India compared to lower valuations abroad have been key factors influencing the FII strategy.
Analysts express a sense of cautious optimism as the market enters a new week.
The Reserve Bank of India’s supportive policy and robust GST collections provide domestic reassurance, although volatility may endure due to FII outflows and global challenges. Investors should pay close attention to Q2 earnings, particularly from IT and banking leaders, for guidance on sectoral leadership.
“A buy-on-dips approach is recommended, focusing on domestic cyclicals like metals, autos, financials, and defense themes, while selectively considering other sectors. Broader markets should be approached carefully, with emphasis on fundamentally solid companies. Traders must also monitor global events, especially US macro data and FOMC minutes, which could impact short-term sentiment,” advised Ajit Mishra, SVP of Research at Religare Broking Ltd.
The upcoming week is crucial as the Q2 FY26 earnings season kicks off, with IT giant TCS set to report results on October 9. Additionally, the release of HSBC Services and Composite PMI, alongside banking sector data on loan and deposit growth, will be under close scrutiny.
Point of View
It is essential to recognize the shifting dynamics in the investment landscape. The trends observed suggest a cautious yet hopeful outlook as FPIs adjust their strategies. Staying informed and adaptable will be crucial for investors as they navigate these changes.
NationPress
04/10/2025
Frequently Asked Questions
What are the recent trends in FPI selling?
FPIs have been actively selling, with a total of Rs 27,163 crore sold in September alone. However, they also purchased equities worth Rs 3,278 crore, indicating a mixed approach.
How do current valuations affect FPI strategies?
The higher valuations in India compared to cheaper options abroad are influencing FPIs to reconsider their selling strategies as Indian earnings are expected to improve.
What should investors focus on in the coming weeks?
Investors should closely monitor Q2 earnings reports, particularly from major IT and banking companies, as these will provide insights into market trends and sectoral leadership.
