Foreign Institutional Investors (FIIs) refers to investments made by foreign institutions in a country’s financial markets, usually for short-term gains. FII focuses on financial assets like stocks and bonds without management control. FII is regulated by securities authorities, requiring registration to invest in financial markets.
In 2025, FIIs have withdrawn approximately ₹1.16 lakh crore (around USD 13.23 billion) from Indian equities, with significant sell-offs in sectors like IT, FMCG, and Power. This trend reflects a risk-averse stance among global investors amid various economic challenges. Conversely, some sectors like telecommunications, services, and chemicals have attracted FII interest.
The withdrawals are attributed to several factors:
(a) Weak Earnings: Disappointing quarterly results have raised concerns about corporate health. A downturn in corporate earnings has increased investor caution and contributed to the sell-off.
(b) Global Economic Pressures: Factors such as tariffs and a weakening rupee have contributed to a risk-averse sentiment among investors. The imposition of US tariffs on Indian goods has negatively impacted investor sentiment and raised questions about India’s investment appeal.
(c) Market Volatility: The overall market has faced significant fluctuations, prompting FIIs to shift focus to small and mid-cap stocks.
(d) Weakening Rupee: A weaker Indian Rupee has contributed to the risk-averse stance of global investors.
FIIs have undertook increased withdrawal from India in 2025 driven by concerns over weak earnings, a depreciating Indian Rupee, geopolitical events like US tariffs, and potentially better returns in other stock markets. The trend of FII withdrawals in 2025 indicates a cautious approach by foreign investors, with significant impacts on key sectors. While some sectors continue to attract investment, the overall sentiment remains cautious amid economic uncertainties.
Also see