Foreign Investors: Is India Still a Hot Destination? Market Trends Unpacked

• Indian market faced volatility in 2025 due to significant FPI selling, driven by high US interest rates, India's premium valuation, and a weak rupee.
• FII stake in NSE-listed companies dropped to a 15-year low of 16.7%, with FIIs selling approximately 1.59 trillion rupees.
• Domestic Institutional Investors (DIIs) and retail investors have filled the void, absorbing FII selling, while FDI remains strong with a 22% increase in equity inflows.
• Recent weeks show a positive shift: FPI selling has decreased, and buying has been observed due to softening global bond yields and India's entry into global bond indices.
• Experts believe foreign investment in India is evolving, not ending, with a gradual return expected as global conditions improve and India's growth prospects remain strong.

Why It Matters: Foreign investors are cautious but not abandoning India; a gradual return is expected as global conditions improve.