Foreign institutional investors (FIIs) are often seen as the “smart money” in Indian equities, with their buying and selling patterns closely tracked by market participants. But a historical comparison shared by Zerodha co-founder Nikhil Kamath suggests that when FIIs have sold aggressively during major market crises, their timing has not always proved right in hindsight. In several instances, sharp foreign selling was followed by strong gains in the over the subsequent 12 months, with domestic investors appearing to have navigated such periods more effectively.
“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…” Kamath said in a recent LinkedIn post.
Every Time FIIs Panicked, What Happened Next?
The analysis tracks some of the biggest market crashes and the heaviest FII selling months associated with them, along with Nifty 50 returns over the following 12 months and returns in US dollar terms.
During the 2008 Global Financial Crisis, October saw selling of ₹15.3K crore. Following the panic low, the Nifty 50 delivered a 92% return over the next 12 months, while the return in US dollar terms stood at 105%.
The 2015-16 China slowdown saw the heaviest FII selling in August at ₹16.8K crore. The Nifty 50 subsequently gained 28%, while the return in US dollar terms was 31%.
During the 2018 IL&FS default, FIIs recorded their heaviest selling in October, amounting to ₹28.9K crore. The Nifty 50 went on to deliver a 15% return over the next 12 months, while the corresponding gain in US dollar terms stood at 19%.
The pattern was even more pronounced during the 2020 crash. In March, FII selling reached ₹61.9K crore. The Nifty 50 subsequently surged 95%, while returns in US dollar terms stood at 104% over the following 12 months.
During the 2022 period of Fed hikes and the Ukraine conflict, the heaviest selling month was June, at ₹50.2K crore. The Nifty 50 delivered a 23% return in the subsequent 12 months, while the gain in terms was 17%.
The 2024-25 selloff saw FII selling of ₹94.0K crore in October. The Nifty 50 subsequently rose 11%, while the return in US dollar terms stood at 5%.
2026 Iran War and AI Rotation: The Biggest Selling Yet
The latest episode highlighted in the analysis is the 2026 Iran war and AI rotation. FIIs recorded their heaviest selling in March at ₹1.17 lakh crore, described as the biggest ever.
The outcome of this episode is still unfolding. As of the data available in the analysis, the Nifty 50 had delivered a TBD return of 8% so far, with the situation marked as “Still playing out.”
The key takeaway from the historical comparison is that FII panic selling has often been followed by a Nifty recovery, with the graphic noting that domestic money has been the buyer at every bottom.
The analysis also carries an important qualification. The 2026 return is measured from the March 30, 2026 low, as of the August 28, 2026 close.
Further, October 2008, August 2015, October 2018, March 2020, October 2024 and March 2026 were each the biggest FII selling month on record at the time.
The returns shown are Nifty 50 price returns, with dividends excluded, while US dollar returns use RBI/FBIL reference rates. FII flow data is sourced from and NSDL, while index values are sourced from the NSE.
Notably, the graphic points out that in 2015 and 2024-25, the heaviest selling came months before the market low. In the other five crashes, however, the heaviest selling month was the low itself.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.