However, the pace of selling appears to have slowed down slightly in recent sessions, according to market experts.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that while the trend of FII selling in India continued in early March, there are now signs of slight decline in the intensifying in the last couple of days. Despite this, cumulative FPI equity outflows for 2025 have already reached over Rs 1.30 lakh crore, reflecting a sustained risk-off sentiment among foreign investors.
The continued outperformance of Chinese equities has been a key factor diverting FPI flows from India.
“Chinese stocks have seen big buying triggered by attractive valuations and expectations from the recent positive initiatives by the Chinese government towards their big businesses,” said Vijayakumar.
The Hang Seng Index has surged with a YTD return of 23.48%, significantly outperforming the -5% YTD return in Nifty, making China a more attractive bet for some foreign investors.Additionally, the recent decline in the dollar index is expected to limit the fund flows to the US, which could impact future FPI movement.Also read: Wall Street Week Ahead: Rocky US stock market faces inflation data test
Meanwhile, global uncertainties, including Trump’s tariff policies, have shifted investor focus towards domestic consumption-driven sectors such as financials, telecom, hotels, and aviation, as foreign-linked sectors remain volatile.
While FPIs remain net sellers, the slowdown in selling intensity could indicate stabilization in Indian equities if macroeconomic conditions improve. Investors are cautious as they watch global factors and rely on the upcoming corporate earnings to assess whether foreign investor sentiment will turn favorable in the coming months.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
