FIIs sold Rs 11,820 crore worth of Indian equities in the first week of December. Can RBI liquidity be a help?

Foreign Institutional Investors (FIIs) continued their selling in the first week of December, selling Rs 11,820 crore worth of Indian equities. They have sold domestic equities worth Rs 1,55,495 crore so far in 2025.FII selling on Friday stood at Rs 439 crore, while domestic institutional investors (DIIs) were net buyers at Rs 4,189 crore.

While FIIs have not deviated from their sell-off policy, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said their sell-off was completely overshadowed by continued strong buying by DIIs who bought shares worth Rs 19,783 crores during this period. “FIIs are selling now mainly due to the sharp depreciation of the rupee this year, by around 5%. It is normal for FIIs to sell and cash out during times of currency depreciation. On the other hand, DIIs have been investing systematically, supported by continued cash flows, and recently have been buoyed by robust GDP growth rates and expectations of a future rise in corporate profits,” he said.

Foreign portfolio flows continued to follow their usual pattern in December, with foreign investors extending their selling streak – although the pace of outflows has slowed from Rs 3,765 crore in November. This followed strong inflows of Rs 14,610 crore in October.

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In the third quarter of CY25, FIIs sold shares worth Rs 76,619 crore, reversing purchases from the April-June period when inflows totaled Rs 38,673 crore. The year had started sharply on a negative note with foreign investors pulling out a huge Rs 1,16,574 crore in the January-March quarter.

Vijayakumar expects sales trends to continue at higher levels as valuations are still considered on the higher side. “In this tug-of-war between FIIs and DIIs, there will be days of sharp moves in the markets in response to news and events. For example, if there is a fair trade deal between India and the US, it could boost sentiment in both equity and currency markets,” he added.

Vijayakumar said Friday’s 25 basis point rate cut by the Reserve Bank of India (RBI) and the proposed massive liquidity infusion have further improved sentiment in favor of the bulls.

“The decision to provide even more monetary stimulus to the economy, even when the economy is operating at full capacity, reflects a bold, pro-growth central bank. With fiscal and monetary policy geared toward growth, growth regaining momentum and evidence of accelerating earnings growth, DIIs will continue to buy.

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