FII ownership in Indian stock market dropped to 15.85% as of August 2025, with assets slipping to less than ₹70 lakh crore.
That’s the lowest shareholding in over 13 years levels last seen in 2012.
Why are FIIs running away from India when the Sensex and Nifty are at record highs?
Let’s decode.
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That’s the lowest shareholding in over 13 years levels last seen in 2012.
Why are FIIs running away from India when the Sensex and Nifty are at record highs?
Let’s decode.
Bookmark and retweet this thread to revisit it later
Imagine the stock market as a wedding.
Indians are the family.
FIIs are the rich guests.
When rich guests eat, spend and dance—it makes the wedding look grand.
When they leave early, the party feels hollow, even if the family is still enjoying.
That’s exactly what’s happening in Dalal Street.
Indians are the family.
FIIs are the rich guests.
When rich guests eat, spend and dance—it makes the wedding look grand.
When they leave early, the party feels hollow, even if the family is still enjoying.
That’s exactly what’s happening in Dalal Street.
Here’s the data no one wants to headline:
● In 2021, FIIs owned nearly 20% of Indian stocks
● By 2025, that’s down to 15.85%
● In absolute terms, they still hold ₹70.33 lakh crore—but the slice is shrinking fast
Meanwhile, domestic investors (DIIs + retail) now hold more than FIIs for the first time ever.
● In 2021, FIIs owned nearly 20% of Indian stocks
● By 2025, that’s down to 15.85%
● In absolute terms, they still hold ₹70.33 lakh crore—but the slice is shrinking fast
Meanwhile, domestic investors (DIIs + retail) now hold more than FIIs for the first time ever.
Why are FIIs leaving?
3 big reasons:
1.Global Rate Shock
US interest rates are at multi-decade highs. Why take India risk when US bonds pay 5% safely?
2.China Discount
Global funds are rotating money into cheaper Chinese and EM stocks after years of underweight.
3.Valuation Fear
Indian markets trade at 21–22x forward PE, way above peers. For FIIs, India looks expensive.
3 big reasons:
1.Global Rate Shock
US interest rates are at multi-decade highs. Why take India risk when US bonds pay 5% safely?
2.China Discount
Global funds are rotating money into cheaper Chinese and EM stocks after years of underweight.
3.Valuation Fear
Indian markets trade at 21–22x forward PE, way above peers. For FIIs, India looks expensive.
Despite FIIs selling, markets haven’t crashed.
Why? Because Indian retail investors have silently replaced them.
● SIP inflows now average ₹20,000 crore a month
● Domestic mutual funds have turned net buyers in almost every correction
● LIC + Indian insurers quietly absorb FII exits
This is the rise of the Indian middle class investor.
Why? Because Indian retail investors have silently replaced them.
● SIP inflows now average ₹20,000 crore a month
● Domestic mutual funds have turned net buyers in almost every correction
● LIC + Indian insurers quietly absorb FII exits
This is the rise of the Indian middle class investor.
Think of it like cricket:
Earlier, India’s market was dependent on foreign stars.
Now, the homegrown bench strength—small-town investors with SIPs—are playing like pros.
FII exits that once caused a crash now cause only a dip.
Earlier, India’s market was dependent on foreign stars.
Now, the homegrown bench strength—small-town investors with SIPs—are playing like pros.
FII exits that once caused a crash now cause only a dip.
FII moves still matter.
They:
● Influence currency (rupee weakens when they sell)
● Dictate sector flows (tech, banks feel their exit first)
● Shape global perception (MSCI weights, fund allocations)
So while India feels “decoupled,” the reality is—FIIs still move the needle.
They:
● Influence currency (rupee weakens when they sell)
● Dictate sector flows (tech, banks feel their exit first)
● Shape global perception (MSCI weights, fund allocations)
So while India feels “decoupled,” the reality is—FIIs still move the needle.
If FIIs are exiting at the highest valuations in history, it means:
● Risk-reward is skewed
● Global funds expect better bargains ahead
● You shouldn’t blindly buy every dip
Retail flows may hold markets, but they can’t guarantee returns if earnings don’t catch up.
● Risk-reward is skewed
● Global funds expect better bargains ahead
● You shouldn’t blindly buy every dip
Retail flows may hold markets, but they can’t guarantee returns if earnings don’t catch up.
In 2012, when FII shareholding was last this low—markets stayed flat for nearly 2 years.
It wasn’t a crash.
It was a long, painful time correction.
That could be the script again—no collapse, just dead money for years if earnings disappoint.
It wasn’t a crash.
It was a long, painful time correction.
That could be the script again—no collapse, just dead money for years if earnings disappoint.
FII ownership is at a 13-year low.
Domestic investors are the new backbone.
But valuations remain stretched, and global money is watching from the sidelines.
India may still deliver—but the easy foreign inflows are gone.
It’s time for patience, not panic.
Domestic investors are the new backbone.
But valuations remain stretched, and global money is watching from the sidelines.
India may still deliver—but the easy foreign inflows are gone.
It’s time for patience, not panic.
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