Foreign institutional investors (FIIs) have channelled nearly a quarter of the money they pulled from Indian stocks in the secondary market into fresh share issuances over the past year, making the primary market an important outlet for foreign capital even as their broader equity holdings have declined.
FIIs sold a net Rs 3.38 lakh crore ($36.5 billion) of equities in the secondary market in the 12 months through August, while investing about Rs 80,000 crore ($8.7 billion) in IPOs, QIPs and other primary issuances, according to data from JM Financial Institutional Securities. The primary-market investment was equivalent to 23.6 percent of their secondary-market selling.
The allocation towards fresh issues has gained relevance as foreign investors have started buying Indian equities again. FIIs were net buyers for a second consecutive month in August, investing Rs 24,440 crore. Of this, Rs 12,610 crore went into primary-market issuances and Rs 11,830 crore into secondary-market stocks. In July, the corresponding inflows were Rs 12,290 crore and Rs 11,040 crore.
The renewed buying has not yet reversed the longer-term decline in foreign ownership. FII ownership of Indian equities fell to 14.2 percent in August 2026 from 20 percent in August 2016, a decline of 580 basis points.
Their equity assets under custody stood at Rs 70.4 lakh crore at the end of August, little changed from Rs 70.2 lakh crore a month earlier.