Foreign investors have been net sellers in India in 6 of the 7 trading days in January so far. This is in continuation of the significant outflow seen in 2024 as well. According to the latest updates on the NSDL website, FIIs have sold shares worth Rs 22,259 crore in the first two weeks of January. This follows a whopping outflow of over Rs 1.20 lakh crore in the secondary markets in 2024 by Foreign Portfolio Investors or FPIs.
Outlining the ongoing trend, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services explained that, “FIIs intensified their selling spree in January. The single major reason for the relentless selling by the FIIs is the steady rise in the dollar index which is above 109 now. The surge in the 10-year bond yield to above 4.6% is ensuring capital flows from emerging markets like India. In January through 10th FIIs sold equity for Rs 22259 crores. (NSDL).”
Here are 6 reasons why FIIs are exiting India
The weakness in the rupee and the firming dollar is no doubt a key factor but there are some other concerns too. Here is a look at the 6 reasons why FIIs are selling so much and exiting India-
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The rupee has been on a downward spiral since 2025. In the past few trading sessions, the currency has hit a fresh lifetime low and closed at a new closing low in every session. It is currently hovering at the psychologically important 86/$ mark. In fact year-to-date, the currency is down almost 4% against the greenback. The weakness in the currency continues despite efforts by the Reserve Bank of India to intervene in the forex market. The dollar index has seen a steady upmove and it is currently above 109.
US jobs data better than expected
The latest jobs data from the US is another factor that contributed to the FII exodus. According to the jobs data, unemployment levels are better than expected at 4%. This indicates resilience of the US economy and the macro construct indicates favourable opportunities in the US. “This means the possibility of more rate cuts by the Fed in 2025 is receding.
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