The Indian stock market’s love affair with foreign money appears to be on ice. FIIs have been consistent sellers for weeks, and analysts say the pressure won’t ease without compelling reasons to buy back in.
Week-on-week data shows FIIs offloading ₹18,400 crore from cash markets. This marks the longest selling streak in 18 months, erasing much of the optimism built during the early-year rally.
Market veterans attribute this behavior to a perfect storm of global headwinds. ‘Elevated US bond yields, persistent inflation fears, and Middle East tensions have made India less attractive for foreign portfolio flows,’ explained market analyst Vikram Desai from Horizon Investments.
Compounding these issues are domestic concerns. Monsoon delays have raised agricultural output worries, while sticky inflation numbers challenge the Reserve Bank of India’s rate cut timeline.
Interestingly, Domestic Institutional Investors (DIIs) have been net buyers throughout, investing over ₹10,000 crore. This divergence highlights shifting market dynamics, with local money increasingly driving price action.
Sector-wise, FIIs have hammered financials, metals, and realty stocks hardest. Banking heavyweights have lost 7-10% in recent sessions, while metal stocks face additional pressure from falling global commodity prices.
Looking ahead, analysts identify three potential circuit breakers: impressive Q3 results beating lowered expectations, de-escalation in global conflicts, or the Fed signaling rate cuts sooner than anticipated.
Market participants remain on edge as FIIs hold substantial cash positions offshore. The next few trading sessions will be crucial in determining whether this marks a tactical pause or the beginning of a prolonged bear phase.
Smart money is rotating into defensive plays—FMCG, pharma, and select IT names—while maintaining strict stop-losses. The era of reckless buying appears over until foreign conviction returns.