FII Holdings Hit Lowest Level Since March 2024 as Selling Continues

Foreign Institutional Investors (FIIs) have continued their selling spree in Indian equities, leading to a sharp decline in their holdings. Since the beginning of 2025, FIIs have sold shares worth nearly ₹1.07 lakh crore ($11.4 billion), making it one of the most significant outflows in recent times. This aggressive selling has caused their Assets Under Custody (AUC) to drop to ₹64.78 lakh crore as of mid-February, marking the lowest level since March 2024.

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Unrelenting FII Selling Pressure

The persistent outflows from FIIs have been attributed to multiple factors, including concerns over India’s premium stock valuations, global economic uncertainties, and interest rate trends in the U.S. The sell-off has been particularly intense in the financial services, fast-moving consumer goods (FMCG), and capital goods sectors, which saw significant reductions in FII holdings during the first two weeks of February.

Market analysts suggest that FIIs are pulling funds out of Indian markets due to a combination of rising global bond yields and concerns about stretched valuations in the Indian stock market. Additionally, a stronger U.S. dollar and expectations of prolonged high-interest rates by the U.S. Federal Reserve have made emerging markets, including India, less attractive for foreign investors.

Impact on Indian Stock Market

The large-scale FII outflows have contributed to increased volatility in Indian equities. Over the past few weeks, benchmark indices Sensex and Nifty have struggled to maintain upward momentum, facing selling pressure across key sectors. The Nifty 50 and BSE Sensex have witnessed multiple sessions of declines, with financial stocks leading the downturn.

Despite the FII sell-off, domestic institutional investors (DIIs) have provided some support to the market. DIIs, including mutual funds and insurance companies, have been net buyers, absorbing some of the foreign selling pressure. However, their efforts have not been enough to completely offset the impact of the sharp foreign outflows.

Outlook and Market Sentiment

Market participants remain cautious about the near-term outlook for Indian equities. If the U.S. Federal Reserve signals a prolonged period of high-interest rates, FII outflows may continue, further pressuring Indian stocks. However, strong domestic economic growth and resilience in key sectors could help stabilize market sentiment.

To Summarize

For now, investors are closely watching global economic trends, U.S. monetary policy, and corporate earnings reports for further direction. With FIIs continuing to offload Indian stocks, market volatility is expected to remain high in the coming weeks.