FIIs Selling India: Why Foreign Investors' Confidence Has Weakened & When They'll Return

• Foreign Institutional Investors (FIIs) maintain significant net short positions in the Indian stock market, indicating a belief that the market may remain under pressure.
• Mihir Vora, CIO of Trust Mutual Fund, attributes FII selling to India lagging behind Asian peers in 2025, particularly during a global AI investment cycle.
• India lacked a major sectoral trigger like AI and a strengthening rupee, unlike countries such as Korea, Taiwan, Japan, and China which benefited directly from AI hardware and software.
• A potential India-US trade deal could significantly improve sentiment and change foreign investors' perception, acting as a crucial positive trigger.
• Vora suggests focusing on mid-cap and high-growth IT service companies over large-cap IT stocks, and favors non-ferrous metals like zinc, copper, and aluminum due to AI, EV, and renewable energy demand.

Why It Matters: FIIs are selling due to India's lag in AI and lack of strong triggers; a trade deal or AI cooling could bring them back.