After record selling last year, India’s strong fundamentals to attract net FII inflows in 2026

New Delhi, Jan 3 The year 2025 saw record foreign institutional investor (FII) selling in India but significant improvement in the country’s fundamentals is likely to attract net FII inflows in 2026, analysts said on Saturday.

In the month of December, FIIs sold equity worth Rs 30, 332 crore through the exchanges. This takes the total FII selling through the exchanges in 2025 to Rs 240,193 crore.

FIIs have bought or invested equity for Rs 73,909 crore through the primary market, taking the total net sell figure for 2025 to Rs 166,283 crore, as per NSDL data.

“This is the worst selling by FIIs since they started investing in India. In 2024 also, FIIs have been selling through the exchanges. They sold equity for Rs 121,210 crores. However, for the year as a whole, the net FII inflow was positive since they had invested Rs 121,637 crore through the primary market. But for 2025, the net sell figure is a massive Rs 166,283 crore,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

The relatively elevated valuations in India and the ‘AI trade’ were the principal factors that pushed the FIIs to sell mode in India.

The sustained selling by FIIs have contributed significantly to the sharp depreciation of 5 per cent in the rupee vs the dollar in 2025.

“The year 2026 is likely to witness some changes in the FII strategy,” Vijayakumar mentioned.

Robust gross domestic product (GDP) growth and prospects of improvement in corporate earnings in 2026 augur well for positive FII flows in 2026, said analysts.

On the other hand, domestic institutional investors (DIIs) did some heavy buying last year to offset the FII outflows.

A recent Motilal Oswal Financial Services Ltd report said that DIIs recorded robust inflows of $8.7 billion in the month of November, marking their 28th consecutive month of buying.

In 2025 (year to date), DII inflows hit $81.3 billion, already surpassing the full-year 2024 levels, it added.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor