Mumbai: Foreign Institutional Investors (FIIs) have continued to sell Indian equities in December, but strong buying by Domestic Institutional Investors (DIIs) has helped keep the market steady. So far this month, FIIs have sold shares worth Rs 15,959 crore through stock exchanges. At the same time, DIIs have bought equities worth a much higher Rs 39,965 crore, clearly offsetting the foreign selling pressure.
Market experts believe that the pace of FII selling may reduce in the coming days as India’s economic outlook remains positive and corporate earnings prospects are improving.
Economy and Earnings Outlook Remain Strong
According to analysts, sustained selling by FIIs does not make much sense when India’s growth story remains intact. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, said that continuous selling is not sustainable when economic growth and earnings visibility look bright. He added that FIIs may find it difficult to keep selling aggressively while maintaining large short positions in such conditions.
Experts feel that the Indian economy is showing resilience, and this is giving confidence to domestic investors to continue investing despite global uncertainties.
SIP Inflows Support the Market
One of the strongest pillars supporting the Indian stock market is the steady inflow into mutual fund Systematic Investment Plans (SIPs). Retail investors have been investing consistently, with monthly SIP inflows staying above Rs 29,000 crore for the last three months. In November, SIP inflows stood at Rs 29,445 crore, according to data from the Association of Mutual Funds in India (AMFI).
These steady inflows have enabled DIIs to absorb the selling pressure from FIIs and prevent sharp market declines.
Temporary Factors Behind Market Pressure
Analysts believe that current market concerns such as rupee depreciation, continued FII selling, delays in finalising the US-India trade deal, and uncertainty around global AI-related trade are temporary in nature. These factors may affect sentiment in the short term but are unlikely to derail the long-term market trend.
FII Flows Show Mixed Picture
In November, both FIIs and DIIs were net buyers in Indian equities. Over the last 12 months, FIIs invested heavily in the primary market but pulled money out from the secondary market. Despite this, India’s weight in the MSCI Emerging Markets Index has increased, reflecting global confidence in India’s growth story.
Analysts say earnings growth, especially looking towards FY27, will be the key driver for markets going forward.
