Will FIIs Return to Indian Market in 2025?
Mint Hyderabad|January 07, 2025
Robust SIP inflows and strong retail participation in broader markets are bolstering DII resilience
Dipti Sharma

While overseas investors gave India the cold shoulder in 2024, domestic institutions demonstrated remarkable resilience, maintaining strong inflows. In October, when Indian markets saw the largest foreign institutional investor (FII) sell-off of the year at ₹91,933.64 crore, domestic institutional investors (DIIs) stepped in with the highest monthly net purchases of ₹1,05,253.33 crore.

In fact, 2024 was the fourth consecutive year when DIIs poured more money into markets than FIIs, showed a 2 January IIFL Securities report. Though FIIs returned as net buyers in December, it may be too soon to assume the trend will continue throughout 2025.

"The significant FII selling in the last quarter of 2024 suggests caution, likely driven by a mix of global macroeconomic factors and domestic concerns," according to the research team of Bajaj Broking (Bajaj Financial Securities).

The continuation of this trend in 2025 will depend on how the global economy performs, the actions of the Indian government and the Reserve Bank of India (RBI), and corporate earnings. If global interest rates remain high or inflationary pressures persist, FIIs might continue to favour developed markets, it added.

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