FII turned Net buyers after 23 sessions of selling; Will this trend continue?

Foreign institutional investors (FIIs) have finally broken their prolonged selling streak, marking a significant shift in market dynamics. After 23 consecutive sessions of selling, FIIs emerged as net buyers on February 4, 2025, injecting fresh optimism into the Indian markets.

Breaking the Selling Streak

The market witnessed a notable turnaround as FIIs posted net purchases worth Rs 809 crore on February 4. This marks the first instance of positive net buying since January 2, when they had invested Rs 1,507 crore in Indian equities.

Following this, domestic institutional investors (DIIs) became net sellers of Rs 431 crore during the same session. The combined institutional activity helped boost market sentiment significantly.

In the February 4th trading session, FIIs demonstrated robust activity levels. Their gross purchases reached Rs 18,106 crore, while sales amounted to Rs 17,297 crore. Meanwhile, DIIs engaged in transactions totalling Rs 15,003 crore in purchases against sales of Rs 15,433 crore. On a net-on-net basis, FII are net buyers, while DII are net sellers, resulting in a net inflow of Rs. 376.5 crore into the markets.

Year-to-Date Performance

Despite this positive turn, the broader picture remains challenging. FIIs have maintained a net selling position of Rs 91,760 crore since the beginning of 2025. In contrast, DIIs have shown unwavering support, accumulating shares worth Rs 89,690 crore during the same period.

Market Response

The shift in FII sentiment coincided with a strong market rally. The BSE Sensex surged by 1,397.07 points, reaching 78,583.81, while the NSE Nifty gained 378.20 points to close at 23,739.25. These gains represent the highest levels seen since early January.

Recent Trading Data Analysis

However, subsequent trading sessions suggest caution. Data from February 5 and 6 shows renewed selling pressure, with FIIs recording net sales of Rs 1,682.83 crore and Rs 3,549.95 crore, respectively. DIIs continue to provide support with net buying in these sessions.

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Impact of Interest Rates

In a landmark decision, the Reserve Bank of India (RBI) has cut the repo rate by 25 basis points to 6.25%, marking the first reduction in five years. This significant move comes alongside the RBI’s optimistic GDP growth projection of 6.7% for FY26.

The rate cut signals a shift in monetary policy stance and could potentially attract foreign investments. Lower borrowing costs typically boost market sentiment across sectors, particularly benefiting rate-sensitive segments like banking, real estate, and automobiles.

Future Outlook

Markets remain cautious about the sustainability of FII buying. Global uncertainties continue to influence investment decisions, while factors such as rupee stability and sector-specific opportunities play crucial roles in determining FII flows.

Several sectors, including consumer durables, financials, NBFCs, automotive, and housing finance, are expected to attract investor attention following the rate cut.

Conclusion

While the break in the FII selling streak offers a positive signal, sustained recovery will depend on various factors, including global market conditions, domestic economic indicators, and policy developments. Investors should monitor these developments closely while maintaining a balanced approach to portfolio management.

Written By Fazal Ul Vahab C H

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