FIIs sell ₹11,169 crore worth of Indian equities in first half of Sept

Foreign institutional investors (FIIs) continued their selling streak in September, pulling out ₹11,169 crore from Indian equities in the first half of the month, according to NSDL data. This was attributed to higher valuations in India as compared to other Asian markets such as China, Hong Kong, and South Korea, which prompted FIIs to shift focus to cheaper markets.

“Higher valuations in India vis a vis other markets like China, Hong Kong and South Korea have nudged FIIs to sell in India and buy in cheaper markets. This strategy has worked so far this year since these cheaper markets have hugely outperformed India in 2025 till date,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments. 

On the year-to-date, FIIs have pumped out ₹1,82,109 crore from Indian equity market. On a month-to-date basis, they have sold equities worth ₹46,903 crore in August and ₹47,667 crore in July. January saw the steepest outflow of ₹87,375 crore, followed by ₹58,988 crore in February. On the positive side, inflows were recorded in March (₹2,014 crore), April (₹2,735 crore), May (₹11,773 crore), and June (₹7,489 crore).

On the other hand, domestic institutional investors (DIIs) have continued their support for Indian equities, with net investments of ₹ 27,147 crore so far in September. Overall, they have infused more than ₹5 lakh crore into the market in CY25, remaining net buyers in all eight months this year.

Going forward, FIIs are likely to reduce their selling and may even turn buyers since there are indications of a turnaround in the Indian market, said Vijayakumar.

“India’s GDP growth has rebounded strongly in Q1 and the reforms - Budget tax cuts, rate cuts by the MPC and GST rationalisation- have the potential sustain the growth momentum. Even though earnings growth will be modest in the 8 to 10 percent range in FY26, there is a high likelihood of above 15 percent earnings growth in FY27,” he added.

Vijayakumar believes that the equity market will soon start discounting this, paving the way for a rally taking the Nifty to a new record this year itself. “In such a scenario FIIs are likely to turn buyers in India,” he added.

This week, Indian equities settled on a strong note, supported by favorable domestic developments and a supportive global backdrop. The benchmark indices added 1.5% each, with the Nifty settling at 25,114.00 and the Sensex at 81,904.70. The broader market also saw buying, both midcap and smallcap indices advanced, adding around 2% each. Additionally, themes such as defense and railways, which had been under corrective pressure, also regained traction.

“The tone remained broadly positive throughout the week, aided by rotational participation of heavyweights across sectors,” said Ajit Mishra – SVP, Research, Religare Broking.

After months of underperformance, Information Technology staged a sharp rebound, rising over 4%, aided by favorable global cues and the buyback announcement from Infosys. Autos and metals also maintained their positive momentum. Meanwhile, banking and financials participated in the uptrend but lacked strong leadership, limiting the overall pace of gains, said Mishra.

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