FIIs Withdraw Rs.1.12 Lakh Crore from Indian Markets in Jan-Feb 2025; Know Why they are Selling?
Foreign Institutional Investors (FIIs) prolonged their selling sprees in Indian equity markets by withdrawing Rs.1.12 lakh crore between the first two months of the year 2025. Unaffected by such a huge withdrawal, monthly SIP contributions were steadfast at approximately Rs.26,000 crore during the third successive month in February. SIP flows indicate cumulative SIP inflows during the financial year have crossed last year’s total by more than 32.2% due to high optimism from Indian retail investors, a report from Bajaj Broking says.
FII Outflows Continue Amid Global Uncertainty
FIIs withdrew Rs.34,574 crore from Indian equities in February 2025 alone. The continuous sell-off is being attributed to high U.S. bond yields, a rising dollar, and a growing global economic uncertainty. The change in investor mood reflects a move towards U.S. assets because investors are fearing corporate earnings and lack of liquidity in global markets.
Sector-Wise Investment Trends: Inflows and Sell-Offs
Investor confidence fluctuated in different sectors as some gained traction and others faced substantial outflows.
Telecom Wins Investor Confidence
The telecom industry was the primary recipient of FII inflows, with Rs.5,661 crore entering the industry in February. This was the second month in a row that the industry saw foreign investment, following the growth in 5G network expansion and ARPU growth. Bharti Airtel and Reliance Jio were the companies that attracted investor attention as they continued to consolidate their market positions.
Automobile Sector Experiences Selling Pressure
In contrast to this, the automobile sector has experienced an outflow of Rs.3,279 crore as investors resorted to profit-booking. Issues of weakening rural demand and growing input costs took a toll on major automakers like Maruti Suzuki, Tata Motors, and Bajaj Auto. Electric vehicle (EV) and luxury car segments saw additional pressure that impacted investor sentiment.
Healthcare Stocks Experience Decline
The healthcare industry witnessed sustained selling pressure, with FIIs pulling out Rs.2,996 crore. Regulatory issues, especially U.S. FDA scrutiny of Indian pharma companies, had a major impact on the industry. Top players like Sun Pharma, Dr. Reddy’s, and Cipla witnessed major sell-offs.
FMCG Sector Experiences Capital Rotation
The fast-moving consumer goods (FMCG) space also saw foreign outflows of Rs. 2,568 crore. Investors reallocated their investments to higher-growth industries due to poor rural consumption patterns. Disappointing volume growth in Hindustan Unilever, ITC, and Nestlé India were among the reasons for the lack of investor interest.
Financial Sector Remains Under Pressure
The financial industry continued to be one of the worst affected, with FIIs cutting their exposures in large banks and NBFCs. An increase in interest rates and narrowing global liquidity driven this trend, following on the heels of the selling pressure during January. The sector’s lower weightage in investor portfolios demonstrated the conservative posture adopted by overseas investors.
IT Sector Faces Global Slowdown
The IT sector was also repositioned by FIIs, as demand softened across the world. Slowing spending on technology in major markets like the U.S. and Europe created doubts about future growth opportunities for Indian IT companies, and investors cut back on their holdings.
Conclusion
The large-scale selling by FIIs at the beginning of 2025 reflects changing global investment patterns and economic concerns.
As foreign investors continue to withdraw money from Indian equities, domestic retail investor participation through SIPs continues to be robust, reflecting faith in long-term growth. Sector-wise trends indicate that telecom continues to be a beacon, while automobiles, healthcare, financials, and IT sectors are under some degree of stress. The next few months will tell if FII sentiment becomes stable or if global factors lead to more outflows from Indian markets.
