- Foreign portfolio investors' withdrawal from Indian equities is a temporary global trend
- Domestic institutional investors' holdings now exceed foreign investments for the first time in five years
- DIIs have bought shares for 33 consecutive sessions, totaling Rs 6,224.9 crore in one day
The current period of withdrawal by foreign portfolio investors from the Indian equity markets is only a temporary global-allocation trend, according to K Balasubramanian, chief executive officer of Citi India.
Despite foreign investors extending their selling streak to the longest in months, Balasubramanian is optimistic about a return of overseas capital, particularly given the strong international participation in the primary markets.
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The IPO markets have opened up in 2025. We see a lot of participation from international investors into the markets. It's only a question of time before the foreign money comes back into the markets.K Balasubramanian, CEO of Citi India
DII Holdings Outpace FIIs
For the first time in the last five years, the total domestic institutional investor holdings in the Indian capital markets now surpass that of foreign investments.
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This growing local strength is evident in data, where the DIIs have extended their buying streak to an impressive 33rd consecutive session, mopping up shares worth Rs 6,224.9 crore in a single day.
Conversely, the FPIs have continued their selling spree, pulling out nearly Rs 1.55 lakh crore from domestic equities so far this year.
Balasubramanian attributes the recent FII outflow to a mix of cyclical factors, including the election year, erratic rainfall and a temporary dip in government capital expenditure plans.
FII Outflow A Temporary Global Trend
He noted that FII holdings have been decreasing in the top 500 companies in India over the last five months, primarily because of the strong influx of local money.
"These are trends we see in any global market allocations as investors are always looking for pockets and areas where they can make money," he said, suggesting the selling is a routine, rather than structural, shift.
Looking ahead, Balasubramanian emphasised the crucial role foreign capital plays in achieving India's long-term aspirations of becoming a developed nation. "Multinational banks like us have a very good role there as we have access to the foreign capital, which is the FDI."
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