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FII selling shows signs of easing amid lower oil prices
09 Jul 2026

Foreign Institutional Investors (FIIs) have been on a selling spree in the Indian stock market, pulling out over $60 billion since September 2024.

However, recent trends suggest that this relentless selling may be slowing down.

The change comes after a US-Iran ceasefire and falling crude oil prices, which have eased geopolitical tensions and improved macroeconomic conditions.

FII selling eases after US-Iran ceasefire
Market impact

FIIs have withdrawn nearly $27.4 billion in the last four months (March-June 2026), leading to a nearly 15% correction from the market peak.

However, after the US-Iran ceasefire announcement and subsequent crude oil price decline, FII selling has eased considerably.

The net positive flow of $1.3 billion in late June 2026 contrasts sharply with earlier outflows of $4.3 billion during that month.

DII inflows surge to $162 billion
Investor dynamics

Despite record domestic institutional investor (DII) inflows of $162 billion between October 2024 and June 2026, continued FII outflows of $60 billion have been a major contributor to market volatility.

In June 2026 alone, foreign investors were net sellers for the fourth consecutive month with outflows of $5.2 billion.

However, the pace of selling significantly moderated during this period.

Motilal Oswal report highlights shift in institutional ownership
Market perception

The brokerage firm Motilal Oswal Financial Services believes the current cautious stance of FIIs is due to global capital chasing AI-led investment opportunities, not weakening fundamentals in India.

The report also highlights a major shift in institutional ownership with FII holdings in the Nifty-500 hitting a record low of 17.1% in March 2026.

Meanwhile, DII ownership rose to an all-time high of 20.9%.

Sector-wise breakdown of FII outflows in June
Sector analysis

The report also provides a sector-wise breakdown of June's outflows, with Oil & Gas witnessing the highest outflow at $1.4 billion.

This was followed by Automobiles ($1.1 billion), Metals ($1 billion), and Technology ($0.8 billion).

Despite continued selling, foreign investors remain selective across sectors with Capital Goods and Utilities turning positive in CY26YTD after net outflows in CY25.