Where are foreign investors investing?
An interesting trend is being seen in the Indian stock market this year. On the one hand, Foreign Institutional Investors (FIIs) are heavily selling shares in the secondary market, while on the other hand, they are investing heavily in IPOs, i.e. the primary market. Statistics show that FIIs have withdrawn around Rs 2 lakh crore from the secondary market so far this year, but they have invested Rs 55,000 crore in IPOs. Which has become a topic of discussion in the market.
‘The Great Divergence’ – Two different types of investors
According to an ET report, experts are calling this trend ‘The Great Divergence’. Actually, not all foreign investors are the same. There are some short-term hedge funds that react to global trends, such as the AI boom in the US or the return of investment in China. These investors are selling in the secondary market so that they can book profits or reduce the risk.
On the other hand, there are long-term investors like sovereign funds, pension funds and global long-only investors, who believe in India’s growth story. These people are making initial investments in new sectors through IPOs, where they get a chance to take stake on a large scale.
FIIs active in India’s biggest IPO wave
Interestingly, despite withdrawing money from the secondary market, FIIs are very active in the Indian IPO market. So far this year, 84 companies have listed, from which ₹1.3 lakh crore has been raised. These include big companies like Tata Capital, HDB Financial, JSW Cement, Urban Company, LG Electronics.
Also, by September 2025, FIIs’ stake in Indian equities is set to fall to a 13-year low of 16.7%. That means, on one hand, holdings are decreasing, while on the other hand, new investments are increasing.
Valuation game and profit booking
Experts say that this strategy shows discipline regarding valuation. Corporate earnings have been slow in recent quarters and Indian markets have become expensive compared to other countries. In such a situation, FIIs are withdrawing profits from shares trading at high valuations and reinvesting in IPOs or QIPs at attractive prices. That means they are adopting the strategy of selling high and buying low.
Confidence in primary market, caution in secondary
Market experts say that FIIs are investing in IPOs because they can directly invest money in companies, which supports growth, expansion and debt reduction. This is a better opportunity for long-term investors. At the same time, in the secondary market they still remain cautious due to global uncertainty and changes in interest rates.