‘Zero returns in 3 years’: Financial advisor decodes why FIIs are dumping Indian stocks like hot coal

Foreign investors pulling out of Indian equities isn’t a knee-jerk reaction — it’s a calculated move, Alok Jain, founder of Weekend Investing, feels. Contrary to popular belief, their exit isn’t driven by sentiment but by a lack of meaningful returns, he explained.  

“In USD terms, foreigners have made virtually ZERO returns in the last 3 years and a paltry 7.8% in the last 5. Their stance to sell is not wrong from their perspective,” Jain wrote in a post on X (formerly Twitter).  

His comment sparked debate, with several users agreeing that India has failed to hold foreign investors’ interest.  

“Absolutely. They would leave (or continue leaving), taxes or otherwise, as they have better opportunities elsewhere — China, resurgent EU, Japan,” one user responded.  

Another added, “Adjust to 12.5% tax, it’s even lower! Better to invest in US T Bonds.”  

Others pointed to structural issues, including taxes and regulatory changes. “Reduce taxes, LTCG from that and the cost of hedging currency, and suddenly any other destination looks good and smells better,” one user remarked.  

In recent months, FIIs have been steadily offloading Indian equities, triggering market volatility. High valuations and attractive US bond yields have been the primary reasons for the sell-off, with macroeconomic shifts adding to the pressure.  

The impact has been severe — on February 28, the Sensex and Nifty logged their fifth consecutive monthly decline, marking the longest losing streak since 1996. A mix of a global slowdown, tariff wars, and weak Q3 earnings has fueled broad-based selling, keeping Dalal Street on edge.