FIIs were net sellers in December, with Rs. 22,611 crore offloaded domestic shares while the total outflow in 2025 is Rs. 1,66,286 crore had been reached.
Commenting on the current trends, VK Vijayakumar, chief investment strategist at Geojit Investments termed it the worst sell-off by FIIs since they started investing in India.
The year 2025 ended on a grim note for foreign investors, with FIIs selling record equity in India as they sold in the secondary market in CY2025 for Rs. 2.40 lakh crore worth of equity sold, Vijayakumar said, adding that through the primary market during the year, his Rs. 73,909 crore in equity investment declined.
In December alone, FIIs in the secondary market invested Rs. 30,332 crore worth of shares were sold.
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Vijayakumar attributed India’s relatively high valuations and AI trade as the main factors behind the FII exit last year. Their continued selling has also caused the Indian rupee to depreciate significantly against the US dollar.
The INR has been the worst performing major currency this year, depreciating by around 5% throughout the year.
2025 FII Snapshot
FIIs in the third quarter of CY25 raised Rs. 76,619 crore in Q3 after offloading shares to Rs. 11,766 crore worth of shares were sold. They reversed the buying trends seen in the April-June period when a total of Rs. 38,673 crore was inflow. During the January-March quarter, foreign investors invested Rs. The year opened on a sharp negative note with massive withdrawals of Rs 1,16,574 crore.
2026 Outlook
Vijayakumar expects 2026 to see some changes in FII strategy. “Significant improvement in India’s fundamentals is likely to attract net FII inflows in 2026. Prospects for strong GDP growth and improvement in corporate earnings in 2026 bode well for positive FII inflows in 2026,” Geojit analyst said.
Nilesh Jain, Head Vice President, Equity Research, Centrum Broking, said he expects 2026 to be better than 2025 while Nifty’s December 2026 target is Rs. 29,731, representing a jump of 13%. Improvement in macro indicators, strong Q2 GDP growth, benign inflation and end of corporate earnings downgrades underpin the positive outlook, he said.
India ranked at the bottom of the table, marking its weakest performance among EMs in 30 years, with only 10.5% (6% in USD), driven by rupee depreciation and consistent FII selling. India was also subject to punitive tariffs at the highest level of 50% by the US and a trade deal could not be negotiated till the end of the year,” he said while summarizing the root causes of Nifty’s poor performance last year.
(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of The Economic Times)
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