New Delhi, Dec 27 Robust GDP growth and prospects of improvement in corporate earnings next year augur well for positive foreign institutional investor (FII) flows in 2026, analysts said on Saturday, even as sell figure in December crossed Rs 22,130 crore.
Foreign institutional investors have net sold shares worth Rs 1,58,407 crore in CY25, marking their heaviest selling since they started investing in India. Analysts however said that there are signs of a reversal of foreign institutional investor outflows due to macro strength and earnings visibility.
"As the year 2025 draws to a close, FII selling in India is on track to set a new record in FII outflows," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
In 2024, FIIs have been selling through the exchanges, as much as Rs 1,21,210 crore worth of equities. However, for the year, the net FII inflow was positive since they had invested Rs 1,21,637 crore through the primary market. But for 2025, the net sales figure is massive, he added.
The sustained selling by FIIs have contributed significantly to the sharp depreciation in INR this year, he said, adding that improvement in fundamentals is likely to attract net FII inflows in 2026.
Analysts said that sustained FII selling, along with the high trade deficit, contributed significantly to the depreciation of the rupee in 2025.
The rupee's annual depreciation is around 5 per cent, and it dipped marginally on Friday amid crude oil price recovery. Meanwhile, Net foreign direct investment (FDI) in India nearly doubled to $6.2 billion during April‑October from $3.3 billion a year earlier, primarily due to fall in repatriation of foreign capital despite a rise in outward FDI, an official statement has said.
Gross inward FDI rose marginally to $58.3 billion in April‑October from $50.5 billion a year ago. Repatriation or the amount of foreign capital leaving India fell to $31.65 billion from $33.2 billion during the same period.
A recent report from Emkay Global Financial Services said the weakness in the rupee may keep foreign portfolio investors (FPIs) away, with a return expected only after the currency stabilises for an extended spell (1-2 months).
The report noted that FPIs continue to be large-cap heavy with a high overweight (OW) on Financials.
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