Foreign institutional investors (FIIs) have pulled back sharply in early November, with net selling topping Rs 13,925 crore by the weekend according to NSDL data.
The pull‑back comes as India’s earnings look softer than markets in the U.S., China, Taiwan and South Korea, which are riding the current AI boom.
“Investors are redirecting their money to those AI‑heavy markets,” said Dr VK Vijayakumar, chief investment strategist at Geojit Investments. “But the AI bull run can’t last forever, and once it slows, India may see new FII inflows again. It’s too early to say when.”
Despite the sell‑off, the long‑term trend in India’s primary market stays bullish. In November alone, FIIs have invested Rs 7,833 crore. For the year so far, total sales through exchanges hit Rs 208.1 billion, while primary‑market buying has reached Rs 62.1 billion.
The story isn’t all down‑trending when it comes to foreign portfolio investors (FPIs). Manoj Purohit of BDO India said that FPI flows have become volatile but show signs of recovery.
Key drivers include record domestic sales during the festive period, steady corporate earnings growth and fresh talks on India‑U.S. trade agreements.
Reforms from SEBI—such as KYC alignment, simplified account rules and a single‑window “India Market Access” platform—have also helped lift investor confidence.
Yet the continued sell‑off means FPI ownership in companies listed on the NSE fell to a 15‑year low of 16.9 % in the September quarter.
Overall, investors are trading away shares in India for AI‑driven growth elsewhere, but a rebound in domestic fundamentals could bring fresh foreign capital back next year.
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