FII Outflows in August
Foreign institutional investors (FIIs) withdrew ₹31,889 crore from eight major sectors of Indian equities in the first half of August 2025, with financial and IT stocks experiencing the largest exits.
- Financials: ₹13,471 crore outflow
- IT: ₹6,380 crore
- Oil, Gas, Consumable Fuels: ₹4,091 crore
- Power: ₹2,358 crore
- Healthcare: ₹2,095 crore
- Realty, FMCG, Consumer Durables: Over ₹1,000 crore each
Overall, FIIs sold Indian equities worth ₹20,976 crore in the first half of August, continuing the retreat from July, and bringing total outflows for 2025 to around ₹1.2 lakh crore.
The withdrawals were triggered by concerns over U.S. tariffs on Indian goods and weak corporate earnings for the June quarter.
Impact on Emerging Market Allocation
As a result of FII exits, India has become one of the most underweight markets in emerging market portfolios, with allocations shifting toward countries like China, Hong Kong, and Korea.
The early August FII pullback affected domestic liquidity, although continued strong domestic investor inflows have helped partially cushion the market.
GST Reforms and Market Outlook
Prime Minister Narendra Modi’s Independence Day announcement of GST reforms could act as a catalyst to reverse FII outflows. The reforms aim to simplify indirect taxation, boost consumption, and enhance corporate growth, which may improve investor sentiment over the medium term.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should perform their own research or consult certified financial advisors before making any investment decisions.
