India’s Strong Economy to Boost Foreign Investment in 2026: Analyst

New Delhi, 3 January: After significant sell-offs in 2025, India’s robust economic condition is expected to play a key role in attracting foreign investors in 2026, analysts said on Saturday.

According to NSDL data, foreign institutional investors (FIIs) sold shares worth ₹30,332 crore in December alone. For the entire year of 2025, this figure stood at ₹2,40,193 crore.

During the same period, FIIs invested ₹73,909 crore in the primary market, which reduced the net sell-off to ₹1,66,283 crore.

Dr. V K Vijaykumar, Chief Investment Strategist at Geojit Investments Limited, said, “This is the largest sell-off by FIIs since they started investing in India. In 2024, FIIs also sold shares worth ₹1,21,210 crore through exchanges. However, net FII flows were positive for the full year as they invested ₹1,21,637 crore via the primary market. But in 2025, the net sell-off surged to a substantial ₹1,66,283 crore.”

Relatively high valuations in India and AI-driven trading were among the main factors that motivated foreign investors to sell shares in the country.

Continuous FII sell-offs contributed significantly to a sharp 5 per cent depreciation of the rupee against the dollar in 2025.

Vijaykumar added, “We may see some changes in FII strategy in 2026.”

Analysts noted that strong GDP growth and expected improvements in corporate earnings in 2026 are positive signals for the return of foreign investors.

Meanwhile, domestic institutional investors (DIIs) made heavy purchases in 2025 to offset the FII sell-offs.

A recent report from Motilal Oswal Financial Services Limited stated that DIIs invested a strong $8.7 billion in November, marking their 28th consecutive month of buying.

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ABS/