Why FIIs Keep Selling Despite Record-Low Rupee | Real Reason Explained

Foreign institutional investors continue selling Indian equities even as the rupee hits record lows and domestic growth remains strong. According to Pankaj Tibrewal, FIIs have been exiting since FY21-22, when the US Federal Reserve began aggressive rate hikes. Higher global interest rates typically push money away from riskier emerging markets like India. Additionally, India’s tax structure for global investors reduces net returns compared to other regions. At the same time, attractive AI-led opportunities in China, Taiwan and Korea have diverted significant allocations away from India. As a result, India has moved from premium to discount weightage in EM portfolios. However, Tibrewal believes that a visible earnings recovery may trigger renewed foreign inflows and improve market sentiment ahead.