FIIs Selling Shows Indian Stock Market is Rewarding, Says FM Sitharaman

FII Outflow, Stock Market Today: In a recent post-budget media briefing, FM Nirmala Sitharaman took a complete different take on the massive FII (Foreign Institutional Investors) outflow that the D-street is witnessing. While concerns continue to loom as foreign capital exits India's stock market, FM said that the recent outflow is indicative that Indian equity markets are delivering good returns. Investors are now switching to profit booking as domestic markets have yielded strong returns.

"FIIs also go out when they are in a position to book profits. The Indian economy has an environment today wherein investments are yielding good results," FM Sitharaman said during the media briefing. The recent selling in the Indian stock market doesn't necessarily mean that domestic investments have become less attractive.

Since the advent of this year, benchmark indices— Sensex and Nifty— have declined by over 3.3%. FIIs have offloaded shares worth over Rs 1.56 lakh crore since October last year, including nearly Rs 1 lakh crore in 2025 alone. This has impacted the investor sentiment heavily, causing a sharp correction in the market.

Adding to FM's take on FIIs, Finance Secretary Tuhin Kanta Pandey said that foreign investors aren’t shifting between emerging markets but are instead retreating to their own country, primarily the US, where investment yields are more attractive.

Investor mood shifts with Trump's re-entry

There is no doubt that US assets have become way more attractive. Be it traditional asset classes like treasury yields or the equity market, returns are robust when compared to peer markets. Besides, India is not the only victim of FII outflow as most emerging markets seem to be witnessing a similar trend.

Trump’s return to the White House has caused a major shift in the overall investor sentiment. From a slower pace of Fed rate cuts to tariff threats giving rise to trade tensions, many factors are altogether painting an uncertain picture. This has pushed investors to shift their money from emerging markets to the US, where returns are more stabilised during times of geopolitical uncertainty.

On top of that, the rising dollar index and its impact on Rupee's depreciating value has further dampened the market mood. While uncertainty remains high, the D-street continues to adopt a wait-and-watch stance as major global events pan out.