FIIs Turn Net Buyers in March After Two Months of Selling Amid RBI Rate Cut Hopes

Foreign institutional investors (FIIs) have reversed their trend and become net buyers of Indian equities in March for the first time since December. This shift follows two consecutive months of selling, with renewed investor optimism fueled by expectations of rate cuts by the Reserve Bank of India (RBI) and the US Federal Reserve.

As of March 26, FIIs were marginal net sellers of ₹67 crore, according to NSDL data. However, provisional figures from the NSE indicate net inflows exceeding ₹11,000 crore by March 27, largely driven by passive investments post the Nifty index rebalancing.

Factors Driving FII Interest in Indian Markets

The turnaround in FII activity is attributed to several key factors:

Anticipation of an RBI rate cut in the upcoming policy.

US Federal Reserve’s 2025 dot plot, signaling additional cuts.

Attractive stock valuations following recent corrections.

Liquidity support measures by the RBI.

Underperformance of US and Chinese equities, making India more attractive.

Prashanth Tapse, Senior VP of Research at Mehta Equities, highlighted that appealing valuations following the market correction in the last three months have made Indian stocks more attractive to foreign investors seeking value buys.

He added that India’s strong domestic consumption and proactive liquidity support by the RBI have strengthened investor confidence.

FIIs Exit Worth ₹2.19 Lakh Crore Since October

Between October 2024 and February 2025, FIIs sold Indian equities worth approximately ₹2.19 lakh crore due to high valuations, weak earnings, and growth concerns. However, March marks a potential turning point in investor sentiment.

Independent analyst Deepak Jasani noted that while short-term global market momentum may pick up after April 2 as tariff-related uncertainties ease, the sustainability of this rebound is uncertain.

Outlook: Valuations and Global Cues Key for FII Flows

Going forward, FII activity will depend on:

Global risk appetite.

Domestic market valuations.

Further monetary policy cues from both RBI and the US Fed.

The current rebound signals renewed confidence, but longer-term flows will hinge on how these variables evolve in the coming months.

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