FII Flows

Foreign institutional investor (FII) selling has been a significant overhang for Indian equities during the recent market cycle. However, the pressure has also weighed on several large-caps.

Speaking at Day 1 of the BS BFSI Insight Summit 2026, foreign bank CEOs discussed FII outflows, the long-term India growth story, cross-border capital flows, and opportunities in SME financing

A sharp 1-2 day market rally that an LTCG cut would trigger may actually be used to offload positions, Bernstein said in an October 19 note.

Domestic investor participation has grown faster than FII holdings, making ownership percentage a less meaningful measure of foreign investor confidence

In contrast, DIIs pumped a record around $177 billion in Indian equities over the past 24 months, which is 23% higher than their cumulative inflows during the preceding eight years.

With clear signs of an FY27 earnings revival, a stable INR and an anticipated dovish Fed, make case for an attractive FII entry point, said Anuj Kapoor of JM Financial.

Another issue Bernstein highlighted was the nature of India's large-cap companies, which it believes represents a 'bygone economic era'.

For FII flows to accelerate - lower crude oil prices, rupee stability and two consecutive quarters of earnings delivery without downgrades seem must, says Jignesh Desai of Centrum Broking.

Within the Nifty-500, DIIs were overweight in Consumer, public sector undertaking (PSU) Banks, Oil & Gas, Telecom, Metals, and Technology sectors in the June 2026 quarter, reports suggest.

This sustained FII buying has driven the BSE Capital Goods index 13 per cent in a year, and the BSE Metals pack 33 per cent against a near 3 per cent decline in the benchmark Sensex.

India, Wood wrote, continues to benefit from improving domestic fundamentals, with bank credit growth accelerating to 17-18 per cent year-on-year in 2026.

HSBC had earlier upgraded Indian equities to "Neutral" from "Underweight" and raised its 2026-end target for the BSE Sensex index to 84,000 levels.

In contrast, foreign institutional investor (FII) holding declined to a new low of 17 per cent in June 2026, the MOFSL note said.

While renewed geopolitical tensions in West Asia are likely to keep markets choppy, the Nifty 50 could rise to 26,500 by June 2027, around 10 per cent upside from current levels, Goldman Sachs said.

Zensar Technologies, CDSL, Bandhan Bank and MRPL from the Nifty Smallcap 100 index rallied between 5% and 12% in Friday's intra-day trade.

DII inflows touched a record $ 162 billion during Oct'24-Jun'26, while FII flows turned net positive at $1.3 billion in the second half of June, indicating improving sentiment."

The June monetary policy is a bold statement that addresses the present macro concerns even while striving to keep the resilient growth of the economy intact, says VK Vijayakumar

The government has promulgated an ordinance that, with effect from April 1, 2026, foreign institutional investors will be exempted from tax on both the interest and the capital gains

Indian stock markets fell in May 2026 amid rising crude oil prices, FII selling, US-Iran tensions and weak rupee concerns. Analysts explain what triggered the decline and what investors should do now

FPIs have reduced shareholding in large-cap stocks like HDFC Bank, Reliance and Infosys since 2022 while increasing exposure to Paytm, Eternal, Polycab and healthcare stocks, ICICI Securities said