Global funds sell net 29.9 bln rupees of India equities prior trading day: NSDL

Global funds sell net 29.9 bln rupees of India equities prior trading day: NSDL

Global Funds Turn Net Sellers of Indian Equities Amid Volatility

Foreign institutional investors (FIIs) recorded a net outflow of ₹29.9 billion ($367 million) from Indian equities on the prior trading day, according to data from NSDL. This marks a reversal in foreign investment trends, contrasting with earlier inflows in February 2026, including a ₹19,675 crore ($2.43 billion) purchase in mid-February as reported. The shift underscores the sector's sensitivity to macroeconomic uncertainties, including currency fluctuations, geopolitical risks, and evolving global capital preferences.

The recent outflow follows a period of optimism driven by India's trade deal with the U.S., which temporarily boosted investor confidence by reducing tariffs on key exports. However, renewed concerns over U.S. tariff policies and global risk-off sentiment have prompted caution among foreign funds. In February, global funds had added $2.1 billion to Indian equities, surpassing domestic institutional buying for the first time in 17 months, aided by improving corporate earnings.

Analysts highlight that FIIs remain pivotal to India's equity market dynamics. In 2025, FIIs sold ₹1.5 trillion in Indian stocks, the largest annual outflow in recent history, due to stretched valuations and a weak rupee. While structural reforms and demographic advantages continue to attract long-term capital, short-term volatility persists.

Domestic institutional investors (DIIs), including mutual funds and pension funds, have increasingly offset FII volatility. DIIs now own 24.8% of Nifty 50 stocks, compared to FIIs' 24.3%, reflecting a gradual shift in market ownership. Sustained systematic investment plan (SIP) inflows have provided stability, even during periods of foreign outflows.

While the ₹29.9 billion outflow highlights near-term jitters, long-term fundamentals—such as India's fiscal reforms and corporate governance improvements—remain intact. Investors are advised to monitor upcoming earnings reports and global policy developments for clarity on the market's trajectory.