6 hrs ago
Kamath Says FII Panic Selling Often Precedes Market Gains
Foreign investors often sell Indian stocks when markets are falling sharply.
Many people think these investors are especially smart because they manage large amounts of money.
Nikhil Kamath compared past periods of heavy foreign selling with what happened afterward.
In several cases, the Nifty 50 rose strongly during the next year.
For example, it rose 92% after the 2008 crisis and 95% after the 2020 COVID crash.
The market also gained after major selling during the 2015-16, 2018 and 2022 episodes.
The latest example, involving the 2026 Iran war and AI-related changes, is still developing.
The comparison suggests that domestic investors bought shares when foreign investors were selling heavily.
It does not guarantee that markets will always rise after foreign selling.
Nikhil Kamath’s historical comparison suggests foreign institutional investors have not always timed Indian market exits correctly.
After heavy FII selling during the 2008, 2015-16, 2018, 2020 and 2022 crises, the Nifty 50 gained over the following 12 months.
The Nifty 50 rose 11% after the October 2024-25 selloff, while the latest 2026 episode remains ongoing.
FII selling reached a record ₹1.17 lakh crore in March 2026 during the Iran war and AI rotation episode.
The analysis says domestic investors were buyers at every market bottom, while returns exclude dividends and use specified currency-rate data.
- Who
- Zerodha co-founder Nikhil Kamath and foreign and domestic investors in Indian equities.
- What
- A historical comparison examines whether heavy FII selling was followed by Nifty 50 gains.
- Where
- The analysis concerns Indian stock markets, especially the Nifty 50.
- When
- The comparison covers crises from 2008 through the 2026 episode; the latest figures run through August 28, 2026.
- Why
- Kamath used the comparison to argue that foreign investors are not always right about the timing of Indian market exits.
FII Signals Are Widely Followed
Historical Timing Has Often Failed
Meaning of Foreign Selling
FII Signals Are Widely Followed
Foreign institutional investors are commonly viewed as smart money, so their buying and selling patterns are closely watched by market participants.
Historical Timing Has Often Failed
Kamath’s comparison indicates that aggressive FII selling during several crises was followed by substantial Nifty 50 gains, suggesting foreign investors were not always right about market timing.
Role of Domestic Investors
FII Signals Are Widely Followed
The comparison focuses attention on foreign flows as an important market signal.
Historical Timing Has Often Failed
The analysis says domestic money was the buyer at every market bottom, implying domestic investors navigated these periods more effectively.
Key facts
- Record 2026 FII selling
- ₹1.17 lakh crore in March 2026, described as the biggest selling recorded.
- 2008 outcome
- After ₹15.3K crore of October selling, the Nifty 50 gained 92% over the next 12 months; the US-dollar return was 105%.
- 2020 outcome
- After ₹61.9K crore of March selling, the Nifty 50 gained 95%; the US-dollar return was 104%.
- 2022 outcome
- After ₹50.2K crore of June selling, the Nifty 50 gained 23%; the US-dollar return was 17%.
- 2024-25 outcome
- After ₹94.0K crore of October selling, the Nifty 50 gained 11%; the US-dollar return was 5%.
- Latest status
- The 2026 return was 8% so far from the March 30 low through the August 28 close, and the episode remains in progress.
- Methodology
- Returns are Nifty 50 price returns excluding dividends; US-dollar returns use RBI/FBIL reference rates.
Quotes
Nikhil Kamath
Zerodha co-founder who shared the historical comparison in a LinkedIn post
“Interesting insight: smart foreign money isn't always right, it's often wrong, in terms of timing Indian stock markets. Foreign institutions vs. domestic: domestic seems to have done better...”
livemint.com
Sources
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