Zerodha's Nikhil Kamath highlights FII-DII trend: 'Smart foreign money isn't always right' in Indian markets
“During the 2015-16 China slowdown, FIIs’ heaviest selling was recorded in August at Rs 16,800 crore. The Nifty subsequently returned 28 per cent in rupee terms and 31 per cent in dollar terms over the next 12 months,” according to data shared in Kamath’s post.
- Sep 2, 2026,
- Updated Sep 2, 2026 11:27 AM IST
Zerodha co-founder Nikhil Kamath has highlighted a historical pattern in Indian equities, noting that foreign institutional investors (FIIs) have not always timed their market moves correctly, while domestic investors have appeared more consistent during periods of heavy foreign selling.
"Interesting insight: smart foreign money isn't always right, it's often wrong, in terms of timing Indian stock markets. Foreign institutions vs. domestic: domestic seems to have done better..." Kamath said in a LinkedIn post.
His post also featured a graphic examining Nifty 50 returns in the 12 months following periods of heavy FII selling. It compared returns in rupee terms with those in US-dollar terms across several market sell-offs.
According to the graphic, during the 2008 global financial crisis, October was FIIs' heaviest selling month, with net selling of Rs 15,300 crore. Nifty 50 gained 92 per cent in the following 12 months in rupee terms and 105 per cent in dollar terms.
During the 2015-16 China slowdown, FIIs' heaviest selling was recorded in August at Rs 16,800 crore. Nifty subsequently returned 28 per cent in rupee terms and 31 per cent in dollar terms over the next 12 months.
The pattern was also seen after the 2018 IL&FS default, when October saw FII selling of Rs 28,900 crore. Nifty 50 returned 15 per cent in rupee terms and 19 per cent in dollar terms in the following year.
The 2020 Covid-19 market crash saw FIIs sell Rs 61,900 crore in March. Nifty gained 95 per cent in rupee terms and 104 per cent in dollar terms over the subsequent 12 months.
In 2022, amid Federal Reserve rate hikes and the Russia-Ukraine war, FIIs' heaviest selling month was June, with outflows of Rs 50,200 crore. Nifty returned 23 per cent in rupee terms and 17 per cent in dollar terms over the next 12 months.
The graphic also includes the 2024-25 sell-off, when October recorded FII selling of Rs 94,000 crore. Nifty 50 returned 11 per cent in rupee terms and 5 per cent in dollar terms over the following 12 months.
The latest period highlighted in Kamath's post is 2026, attributed to the Iran war and AI-related rotation. March saw FII selling of Rs 1.17 lakh crore, the biggest monthly FII selling figure.
Nifty 50 was up 8 per cent in rupee terms between March 30 and August 28 following that low, while its 12-month return, in both rupee and dollar terms, remains to be seen.
The graphic further shows that periods of heavy FII selling have historically been followed by Nifty recoveries, with domestic investors emerging as buyers at market bottoms.
Zerodha co-founder Nikhil Kamath has highlighted a historical pattern in Indian equities, noting that foreign institutional investors (FIIs) have not always timed their market moves correctly, while domestic investors have appeared more consistent during periods of heavy foreign selling.
"Interesting insight: smart foreign money isn't always right, it's often wrong, in terms of timing Indian stock markets. Foreign institutions vs. domestic: domestic seems to have done better..." Kamath said in a LinkedIn post.
His post also featured a graphic examining Nifty 50 returns in the 12 months following periods of heavy FII selling. It compared returns in rupee terms with those in US-dollar terms across several market sell-offs.
According to the graphic, during the 2008 global financial crisis, October was FIIs' heaviest selling month, with net selling of Rs 15,300 crore. Nifty 50 gained 92 per cent in the following 12 months in rupee terms and 105 per cent in dollar terms.
During the 2015-16 China slowdown, FIIs' heaviest selling was recorded in August at Rs 16,800 crore. Nifty subsequently returned 28 per cent in rupee terms and 31 per cent in dollar terms over the next 12 months.
The pattern was also seen after the 2018 IL&FS default, when October saw FII selling of Rs 28,900 crore. Nifty 50 returned 15 per cent in rupee terms and 19 per cent in dollar terms in the following year.
The 2020 Covid-19 market crash saw FIIs sell Rs 61,900 crore in March. Nifty gained 95 per cent in rupee terms and 104 per cent in dollar terms over the subsequent 12 months.
In 2022, amid Federal Reserve rate hikes and the Russia-Ukraine war, FIIs' heaviest selling month was June, with outflows of Rs 50,200 crore. Nifty returned 23 per cent in rupee terms and 17 per cent in dollar terms over the next 12 months.
The graphic also includes the 2024-25 sell-off, when October recorded FII selling of Rs 94,000 crore. Nifty 50 returned 11 per cent in rupee terms and 5 per cent in dollar terms over the following 12 months.
The latest period highlighted in Kamath's post is 2026, attributed to the Iran war and AI-related rotation. March saw FII selling of Rs 1.17 lakh crore, the biggest monthly FII selling figure.
Nifty 50 was up 8 per cent in rupee terms between March 30 and August 28 following that low, while its 12-month return, in both rupee and dollar terms, remains to be seen.
The graphic further shows that periods of heavy FII selling have historically been followed by Nifty recoveries, with domestic investors emerging as buyers at market bottoms.