FII outflows in 2 years leave decade-long investment near nil: MOFSL

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.

The sharp Foreign institutional investors (FIIs) outflows of $56 billion from Indian equities over the past two calendar years have offset their cumulative inflows since CY2019 and also pushed decade-long cumulative flows close to zero, according to Motilal Oswal Financial Services (MOFSL). According to MOFSL data, FIIs have sold India equities worth $25.6 billion in CY2026 so far, with flows remaining extremely volatile. Out of first nine months, FIIs have bought shares in just three months -- February ($1.7 billion), July ($2.5 billion) and August ($2.4 billion).

 

In CY2025 and CY2024, FIIs sold Indian equities worth $18.8 billion and $0.8 billion, respectively. In total, FIIs have offloaded Indian equities worth $45.2 billion in these three years.

 

 

Data showed that FIIs bought Indian equities worth $4.2 billion in CY2019, $23.4 billion in CY2020, $3.8 billion in CY2021 and $21.4 billion in CY2023. They, however, sold Indian equities worth $17 billion in CY2022.

 

In these five years, FIIs remained net buyers worth $45.8 billion, data showed.

 

"The sharp FII outflows of USD56 billion over the past 24 months effectively offset the cumulative FII inflows of the previous eight years, leading to near-nil cumulative FII investment in the past decade," the report read. 

FII flows

 

G Chokkalingam, founder and head of research at Equinomics Research, said that the persistent selling by FIIs is among the key reasons why markets have undergone a prolonged phase of consolidation after touching an all-time high in September 2024. Post the September 2024 peak, FIIs were concerned about elevated valuations. Later US tariff war impacted rupee exchange rate and hence, their selling of Indian equities continued. 

 

"In the last one year, the focus of FIIs also shifted to Primary markets at the cost of Secondary markets. An added problem at this moment for FIIs is high oil prices and, therefore, rupee weakness," he said. 

In contrast, domestic institutional investors (DIIs) pumped a record around $177 billion in Indian equities over the past 24 months, which is 23% per cent higher than the cumulative DII inflows over the preceding eight years. 

 

"Strong retail participation, supported by steadily rising monthly SIP contributions, provided a cushion against the relentless FII selling," MOFSL said in the report. 

SIP flows

 

Chokkalingam added that unless oil prices fall substantially below $100 a barrel, FIIs may remain net seller of Indian equities. "Therefore benchmark indices are likely to remain weak." 

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