FIIs Turn Net Buyers in March with ₹11,000 Crore Inflows Post Nifty Rejig

Foreign institutional investors (FIIs) have made a notable return to Indian equities in March, marking the first net inflows after two consecutive months of outflows. According to provisional data from the NSE, FIIs recorded net purchases of over ₹11,000 crore as of March 27, following the Nifty index rebalancing.

Reversal After Two Months of Selling

Till March 26, FIIs had remained net sellers to the tune of ₹67 crore, as per NSDL data. However, inflows surged following passive buying triggered by changes in the Nifty index. This is the first time since December 2023 that monthly net inflows have crossed ₹11,000 crore, signalling a potential turnaround in sentiment.

During the first half of March, FIIs were net sellers of more than ₹22,000 crore, making the reversal particularly significant.

Supportive Factors Driving Inflows

Several factors have contributed to the recent FII interest in Indian equities:

• Nifty Rebalancing: Passive flows associated with index changes led to fresh allocations by global funds tracking the benchmark.

• Attractive Valuations: The recent market correction has improved valuations across key sectors.

• Global Underperformance: Weaker trends in US and Chinese equities have made India a relatively stronger investment destination.

• RBI’s Liquidity Measures: Recent actions by the Reserve Bank of India have improved domestic liquidity conditions, making the market more appealing to foreign investors.

FIIs’ Recent Selloff Trend

Since the end of September 2024, FIIs had consistently sold Indian equities, citing elevated valuations, moderate earnings growth, and macroeconomic concerns. Between October 2024 and February 2025, FIIs pulled out approximately ₹2.19 lakh crore from Indian markets.

The renewed buying in March comes as a break in this trend, offering a potential signal of stabilisation in global investor sentiment towards India.

Conclusion

With net inflows exceeding ₹11,000 crore in March, FIIs have shown renewed confidence in Indian equities following months of heavy selling. While passive flows from index rebalancing played a key role, supportive macro factors and improved valuations may help sustain the momentum going forward.

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