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India Sees Record FII Outflow: What's Next?
3 Jan
Summary
- Foreign investors sold Indian equities worth Rs 1.66 lakh crore in 2025.
- Elevated valuations and AI trade cited as reasons for FII exodus.
- Experts predict improved fundamentals may attract inflows in 2026.
Foreign Institutional Investors (FIIs) saw record outflows from Indian equities throughout 2025, selling shares valued at Rs 1.66 lakh crore. The selling intensified in December, with Rs 22,611 crore exiting the market. Experts like V.K. Vijayakumar of Geojit Investments described this as the worst selling by FIIs since they began investing in India, noting that while primary market investments cushioned the impact, secondary market sales reached Rs 2.40 lakh crore for the year.
The sustained FII exodus was largely driven by India's relatively elevated market valuations and the impact of the AI trade. This trend also contributed to a significant depreciation of the Indian Rupee, making it the worst-performing major currency with a nearly 5% slip over the year. Quarterly data revealed substantial selling, with Q3 seeing Rs 11,766 crore in outflows after a massive Rs 76,619 crore withdrawal in Q2.
