FII selling trend may continue till some positive triggers happen: Analysts

Analysts suggest foreign institutional investors (FIIs) may maintain their selling pattern in Indian markets until positive catalysts emerge to reignite momentum. Persistent FII outflows marked the week ending January 16, with net sales reaching ₹22,529 crore for January (through 16th).

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., noted: “FIIs sold equities nearly every trading day this month. India’s underperformance compared to global markets persists early this year, reflected in Nifty’s -1.73% year-to-date return.”

Despite substantial domestic institutional investor (DII) inflows of ₹7.44 lakh crore offsetting FII outflows of ₹166,283 crore in 2023, Indian markets delivered muted 10% Nifty returns. Analysts attribute this to mediocre earnings growth, stretched valuations, and uncertainties around the US-India trade agreement.

Vijayakumar added: “The artificial intelligence sector drove global market trends through 2023 and continues influencing early 2024 momentum, though this pattern could shift later this year.”

Markets exhibited consolidation last week amid mixed signals, with the Nifty and Sensex closing marginally lower at 25,694.35 and 83,570.35 respectively. Broader indices mirrored this trend with modest gains.

Ajit Mishra, SVP of Research at Religare Broking Ltd., commented: “Upbeat Q3 earnings from major IT firms were counterbalanced by tariff concerns, geopolitical risks, and sustained FII selling.”

Analysts highlight upcoming high-impact data releases that could drive near-term market direction. Key domestic indicators include Manufacturing, Services, and Composite PMI figures, alongside bank loan/deposit growth statistics and foreign exchange reserve data.