FIIs withdraw Rs 11,591 crore from domestic markets this week. May purchases narrow to Rs 13,835 crore

Foreign Institutional Investors (FIIs) are net buyers so far in May, buying Indian equities worth Rs 13,835 crore. The week gone by saw heavy selling from them as they off-loaded shares worth Rs 11,591 crore.

The FII selling comes on the back of a choppy trade through the week. The week started with reaction to last Friday’s credit rating downgrade for the US by Moody’s in the wake of the ballooning debt situation in the country.

On Friday, President Donald Trump pulled another rabbit out of the hat by threatening to enact 25% tariffs on iPhone maker Apple if the handsets sold in the US are made elsewhere. This led to a fall in US treasury yields and the domestic markets are expected to react on Monday when trading resumes.

There are five more sessions left in May and their action would determine if they remain net buyers for the second successive month.

In 2025 so far, FIIs have sold domestic shares worth Rs 98,516 crore. They sold shares worth Rs 78,027 crore in January, Rs 34,574 crore in February and Rs 3,973 crore in March. In April, they were net buyers at Rs 4,223 crore

On Friday, FIIs bought shares worth Rs 1,794.59 crore while the domestic institutional investors (DIIs) were net buyers at Rs 299.78 crore.

The FIIs were sellers seven times on a monthly basis in the financial year that ended on March 31, 2025. The highest exodus of flows happened in October and January when the FIIs sold shares worth Rs 94,017 crore and Rs 78,027 crore, respectively.

Commenting on the latest trends, Saurabh Patwa, Head of Research and Portfolio Manager at Quest Investment Advisors said that FPI flows in India have seen significant exodus in recent quarters, primarily driven by weak corporate earnings, election-related uncertainties, and a slowdown in urban consumption. "These domestic concerns were compounded by global headwinds, including fears of a slowdown due to potential policy changes, such as tariffs from the Trump administration, impacted global currencies, bond markets and delayed decision making by large global corporations," Patwa said.

Citing history he said that periods of intense FPI sell-offs are often followed by strong rebounds as he exuded confidence about their return.

"Early signs of renewed interest have emerged in recent weeks, indicating potential optimism. India’s position as one of the fastest-growing major economies remains a key attraction for global investors. While short-term uncertainties may persist due to global political developments, the long-term outlook for FPI flows into India remains positive—especially if corporate earnings align with current market valuations, enhancing investor confidence and justifying sustained capital inflows," this analyst said.

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