FIIs dump Rs 7,608 cr in two sessions after 1.66 lakh cr sell-off in 2025. Why experts remain convinced on trend reversal in 2026?

While the world has moved to 2026, the foreign money outflow trends sustained over the first two trading sessions with Foreign Institutional Investors (FIIs) selling Indian equities worth Rs 7,608 crore.The FIIs were net sellers in December, offloading domestic shares worth Rs 22,611 crore during the month while taking total outflows in 2025 to Rs 1,66,286 crore.Commenting on the current trends, V K Vijayakumar, Chief Investment Strategist at Geojit Investments called it the worst selling by FIIs since they started investing in India.The year 2025 ended on a grim note for foreign investors, with FIIs clocking record equity selling in India as they sold equities worth Rs 2.40 lakh crore in the secondary markets in CY2025, Vijayakumar said, highlighting that their equity investment of Rs 73,909 crore via the primary market during the year reduced the impact, though.In December alone, FIIs sold shares worth Rs 30,332 crore in the secondary markets. Usual culpritsVijayakumar blamed the relatively elevated valuations in India and the AI trade as major factors behind the FII exodus in the year gone by. Their sustained selling has also contributed towards a significant drop in Indian rupee against the US dollar. The INR has been the worst performing major currency this year, slipping nearly 5% through the year. 2025 FII snapshotFIIs sold shares worth Rs 11,766 crore in Q3 after offloading shares worth Rs 76,619 crore in the third quarter of CY25. They reversed the buying trends seen in the April–June period when inflows totalled Rs 38,673 crore. The year had opened on a sharply negative note, with foreign investors pulling out a massive Rs 1,16,574 crore during the January–March quarter.2026 outlookVijayakumar expects 2026 to likely witness some changes in the FII strategy. “Significant improvement in India’s fundamentals are likely to attract net FII inflows in 2026. Robust GDP growth and prospects of improvement in corporate earnings in 2026 augur well for positive FII flows in 2026,” the Geojit analyst said.Nilesh Jain, Head Vice President - Equity Research at Centrum Broking said that he expected 2026 to be better than 2025 while pegging Nifty's December 2026 target at Rs 29,731, implying an upside of 13%. Improving macro indicators, stronger Q2 GDP growth, benign inflation and an end to corporate earnings downgrades underpin the positive view, he said.India underperformed, ranking at the bottom of the table, with only 10.5% (6% in USD), marking its weakest performance among EMs in 30 years, on the back of rupee depreciation and consistent FII selling. India was also subject to the highest level of punitive tariffs of 50% by the US and a trade deal could not be negotiated till the end of the year," he said, summing-up the root causes for Nifty's underperformance of the last year.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)