Foreign Institutional Investors (FIIs) continued their selling spree in August, offloading equities worth Rs 25,564 crore through the exchanges up to August 23. This took the total equity selling by FIIs this year up to that date to Rs 1,57,440 crore, according to market data.
FIIs have not only been sellers in equities but have also trimmed positions in the bond market.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, one of the key drivers behind this sustained selling is India’s relatively higher valuations compared with other global markets.
He observed, “Since FIIs continue to invest through the primary market/ QIP route, the principal reason for selling through the exchanges is the high valuations in India relative to other markets, particularly emerging markets.”
The selling has been broad-based, extending to banking and financials, which account for a significant portion of FIIs’ holdings.
Vijayakumar said FIIs also offloaded shares in IT “on concerns of poor growth prospects and limited earnings visibility of this segment,” while they were consistent buyers in telecom and capital goods stocks.He further added that in the near term, “FIIs may reduce their selling since dollar is weakening responding to rate cut expectations from the Fed in September. The Fed chief Jerome Powell’s Jackson Hole speech indicates a rate cut in September.”Providing another perspective, Vipul Bhowar, Senior Director and Head of Equities at Waterfield Advisors, said that FIIs have been net sellers for most of 2025, a trend that has persisted into August.He noted, “Foreign Institutional Investors (FIIs) have been net sellers for most of 2025, and this trend continues in August, which has seen substantial outflows despite occasional daily inflows.”
However, he pointed out that FIIs are still selectively participating in the markets, especially in the primary segment.
“When we examine the data for secondary and primary market inflows, it becomes evident that FIIs are still participating in the primary market. This indicates their ongoing investment in new themes and businesses, while they are reducing their exposure to sectors that are experiencing slower growth,” Bhowar explained.
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