Global passive flows into Indian exchange-traded funds (ETFs) turned positive in March after five consecutive months of outflows. Experts said this could mean the selling intensity by foreign investors is slowing down, and active funds could also witness the same trend.
Data from Kotak Mutual Fund show that March recorded a net inflow of $72.96 million via global listings of India ETFs. The last time positive flows were seen was in September with net inflow of $448.49 million. Globally listed India ETFs witnessed a cumulative outflow of $2.1 billion between October 2024 and February 2025.
“Hopefully, this is harbinger of FPI selling intensity coming down on the active side,” said Nilesh Shah, managing director of Kotak Mutual Fund.
According to Sudip Bandhyopadhyay, group chairman of Inditrade Capital, “Valuations have come down sharply from September and things are looking palatable for FIIs due to several factors, including GDP growth projection of 6-6.5% along with the recovery in the currency after a sharp fall.”
At the same time, China’s globally listed ETFs have seen inflows ($7.8 billion) for a second consecutive month in March.
Locally listed ETF flows into India were also positive in March at $301.57 million. February, too, reported inflows of $41.87 million after three consecutive months of net outflows. In China, locally listed ETFs saw outflows of $15 billion in the last two months.
Overall, foreign portfolio investors have withdrawn a total of Rs 1.93 lakh crore from the Indian markets since October last year. In December, there was net inflow of Rs 25,938 crore. In March, FPIs were net buyers at Rs 32,981 crore. So far in April, net selling by foreigners stood at Rs 795 crore. Meanwhile, domestic institutional investors have put in Rs 3.75 lakh crore from October to March. The Nifty is trading more than 10% lower than its September peak.
Most experts believe that the rebalancing of global indices, including MSCI and FTSE, did have an indirect impact on March flows. While flows are expected to sustain, they may not be like before.