In the first week of December 2025, foreign institutional investors (FIIs) sold Indian equities worth ₹11,820 crore, continuing a string of heavy capital outflows this year.
So far in 2025, FIIs’ total net selling from domestic equities has reached about ₹1,55,495 crore.
What’s Behind the Sell-off
- The selling reflects persistent bearishness among foreign investors, influenced by global economic uncertainty and subdued returns in several sectors.
- Declines in the rupee and weak performance in certain sectors have further dampened foreign investor sentiment.
Can RBI’s Liquidity Measures Provide Relief?
Given the capital outflow pressure, attention is turning to the RBI: increased liquidity could help stabilize markets.
In recent policy actions, the RBI has cut rates and initiated liquidity injections — tools aimed at supporting market stability even as foreign capital exits.
What It Means for Markets & Investors
- The heavy FII selling underscores risks for broader market liquidity and could keep volatility high in the near term.
- If the RBI’s liquidity push succeeds, domestic institutions (or other investors) might fill the gap — cushioning the impact of foreign outflows.
- For investors, this period underscores the importance of focusing not only on index-level performance, but also on liquidity, sectoral outlook, and macroeconomic factors.
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