FII selloff: Rs 10,169 crore pulled out in 5 days from Indian markets; valuation fears rise

Foreign Institutional Investors (FIIs) have renewed heavy selling in Indian equities, withdrawing a massive Rs 10,169 crore over five straight sessions through July 17, according to data cited by an ET report. The latest wave of outflows has pushed the July tally past the $1 billion mark, marking a sharp reversal after three months of net buying.The heaviest daily selling came on July 11, when FIIs dumped Rs 4,495 crore. July 17 saw another significant exit, with Rs 3,671 crore in net outflows — the second-largest daily figure during the stretch.

FII activity in Indian equities

*Note: Jul 17 data is based on NSE provisional figures. Source: NSDL, ACE EquityDespite the foreign exodus, Domestic Institutional Investors (DIIs) helped cushion the market, pumping in nearly Rs 11,000 crore over the same period. This DII support prevented sharper corrections amid rising volatility.The July reversal comes after three strong months of FII buying between April and June, with Rs 14,600 crore invested in June alone. Year-to-date, however, the broader trend remains negative, with total FII outflows nearing Rs 90,000 crore in 2025 — reflecting persistent global caution.“In July so far, India has been underperforming most markets, with a dip of 1.6% in the Nifty,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. “A significant contributor to the decline is the selling by FIIs. There is a clear pattern in FII activity this year: they were sellers in the first three months, turned buyers for the next three, and in the seventh month, the trends so far indicate further selling — unless some positive news reverses the downtrend in the market.”He added, “Along with selling in the cash market, FIIs have been increasing short positions in the derivatives market too, which reflects a bearish outlook. Elevated valuations in India and cheaper valuations in other markets will continue to influence FII activity.”Adding to the cautious tone, global brokerage Citi downgraded India’s equity rating to ‘neutral’ from ‘overweight’. The firm cited stretched valuations and a moderating earnings growth outlook, while reaffirming its ‘overweight’ stance on markets like China, Korea, and the Philippines.“India remains the most expensive market (23 times earnings) compared to both its peers and its own average valuation,” Citi noted. “While India’s macro story looks better and a US trade deal may be on the cards, the market’s earnings growth outlook no longer looks exceptional in the context of high valuations.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)