Why FIIs selling Indian stocks is not wrong: Helios Capital’s Samir Arora explains

Foreign Institutional Investors (FIIs) have been net sellers of Indian equities worth Rs 1,16,617 crore in 2025 so far but it is not a reason to worry, according to Samir Arora, founder and fund manager at Helios Capital Management. He tweeted that the FII selling this year has nothing wrong with it and is a marginal rebalancing.

Arora said that the FII selling accounts are just 2% of their portfolio which is worth $750 billion. In his view, the right way to look at the data is to look at the buying/selling not just in the secondary market but also what that are buying via initial public offerings (IPOs) and qualified institutional placements (QIPs).

“Why look at secondary data only? FII view on India is better understood by their total investments- their buying/selling of stocks plus their buying of stocks via IPOs and QIPs. FIIs own about 750 billion USD of stocks primarily in old, large cap names in IT, consumer and financial sector- so they are selling may be 2 pct of their portfolio to buy newer companies, smaller companies which they can only buy via IPOs or QIPs due to size. There is nothing wrong with this marginal rebalancing,” he said.

Foreign Institutional Investors (FIIs) have sold domestic shares worth Rs 20,975 crore in the first fortnight of August 14. They sold shares worth Rs 10,173 crore last week.

The FIIs have been net sellers on four occasions till July on a monthly basis. January saw the highest amount of FII selling at Rs 78,027 crore and was followed by Rs 34,574 crore sell off in February. In March and July months, they sold shares worth Rs 3,973 crore and Rs 17,741 crore, respectively. They were buyers in April, May and June at Rs 4,223 crore, Rs 19,860 crore and Rs 14,590 crore in June.Expert VK Vijayakumar, who is Chief Investment Strategist, Geojit Investments sees FII outflows owing to India’s underperforming versus their global peers over the last six weeks. This underperformance is despite a massive DII buying aided by robust inflows into mutual funds, he said.”Trump’s harsh tariffs and the straining of relations between US and India have impacted the market sentiments and, consequently, shorts have piled up pulling the market down. The tepid earnings growth, elevated valuations and modest projection of 8 to 10% earnings growth for FY26 have emboldened the bears to increase short positions, impacting the market,” Vijayakumar said.Sustained FII selling in IT stocks has pulled the IT index down though the banking and financials have been relatively resilient due to fair valuations and institutional buying, he opined.

Going forward, the FII activity will be influenced by the action on the tariff front, he said, adding that the latest news of easing of tensions between the U.S. and Russia and no further sanctions on Russia indicate that the secondary tariff of 25% imposed on India is unlikely to come into effect after August 27. “This is a positive. Another positive factor which can influence FII behaviour is the rating agency S&P raising India’s credit rating from BBB-to BBB,” he pointed out.

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