FPI Flows: Why Buying and Selling Can Coexist: what most readers overlook

If foreign investors are selling Indian shares, why are they also buying new issues?

The apparent contradiction disappears once we separate investment routes, individual investors and the evidence needed to judge a company. Buying in one part of the market can coexist with selling in another without making either decision irrational.

For an ordinary investor, the consequential question is whether institutional demand tells us enough to justify buying an IPO. It does not.

What does the reported divergence show?

Financial Express’s account of JM Financial’s tracker describes primary-market buying alongside substantially larger secondary-market selling during the 12 months ending September 2026 -> India’s FII paradox: $9.2 billion into IPOs, $39 billion pulled from listed stocks.

That establishes a reported difference between routes. It does not establish a common strategy among all foreign investors.

Observation	Reasonable interpretation	Unsupported conclusion
Buying through primary-market routes	Some foreign capital is entering through those routes	Every IPO is attractively valued
Net selling of existing listed shares	Sales exceed purchases within that category	Every foreign investor is leaving India
Both occur in the same period	Different investment decisions can coexist	The same funds are selling solely to finance IPO purchases

The final distinction is particularly important. An aggregate total combines many investors. It cannot tell us who bought, who sold or whether their transactions were connected.

Are primary-market inflows all IPO money?

No. The category needs to be read before the headline.

SEBI describes “Primary Market and Others” as including purchases in the primary market alongside instruments such as preferential allotments, rights issues and bonus shares -> Chapter 6: Foreign Portfolio Investors.

That official definition is a reason for caution, not proof of the precise composition of JM Financial’s reported figure. Without the tracker’s methodology and breakdown, an IPO-only interpretation remains unverified.

Even an IPO has different components. SEBI explains that it can involve a fresh issue, an offer for sale by existing investors, or a combination -> How to invest in Initial Public Offer?.

Fresh issuance raises capital for the company. An offer for sale transfers existing shares, with proceeds going to the selling shareholders. Both can form part of a legitimate offer, but they answer different questions about where the money goes.

Why might investors buy one opportunity and sell another?

Several explanations are plausible.

A fund might find a newly offered business attractive at its issue price while considering an existing holding expensive. Another might need to rebalance sector exposure. Different funds may also operate under different mandates or investment horizons.

These are possible explanations, not findings about the investors behind the reported flows. Establishing their actual motives would require fund-level disclosures or direct evidence.

The practical implication is that the label “foreign investor” describes a category, not a single decision-maker whose trades retail investors can reliably copy.

What should matter more than institutional demand?

Institutional participation can prompt further investigation. It cannot replace the investment case.

An IPO assessment should connect the offer price to the business’s earnings, cash generation, financial obligations and realistic growth assumptions. It should also distinguish money available for the company’s plans from money paid to exiting shareholders.

Vantage previously examined this company-level tension through Anarock’s profit and cash-flow disclosures -> Anarock Profit Rose 53, but Cash Flow Turned Negative: What Should IPO Investors Trust More?.

The broader lesson is that a convincing growth narrative still needs to be reconciled with financial statements. Neither strong reported profit nor weak cash flow should be interpreted without understanding the reasons and the longer-term trend.

For an investor considering an offer, useful questions include:

• What assumptions about future performance are embedded in the price?
• Does operating cash generation support the earnings narrative?
• What will the company do with the fresh capital?
• How much of the offer consists of existing shareholders selling?
• Would a fall after listing create an unacceptable loss or cash shortage?

These questions remain relevant whether foreign flows are positive or negative.

Does secondary-market selling settle the investment decision?

It does not.

A net outflow describes transactions within a defined category and period. It does not directly measure the change in every investor’s holdings, the market value of those holdings or the attractiveness of every listed company.

Selling pressure may matter for market conditions, but it cannot identify a suitable purchase price or investment horizon for a household.

The reasoned answer to the opening puzzle is therefore straightforward: different opportunities and different investors can produce opposite flows at the same time. The evidence supports separating those flows. It does not support replacing company analysis with either an optimistic IPO headline or a pessimistic selling headline.

FAQ

What are foreign portfolio investors?

They are overseas investors participating in financial assets such as securities. Their objectives and investment strategies can differ.

Can foreign investors buy new issues while selling listed shares?

Yes. Different investors can make different decisions, and an individual portfolio can also buy one investment while selling another.

Are primary-market inflows necessarily IPO inflows?

No. Official reporting categories can include other transactions. The methodology and transaction breakdown must be checked.

Does institutional participation guarantee a good IPO investment?

No. Participation does not establish fair valuation or guarantee returns.

Does an IPO’s entire value become capital for the company?

No. A fresh issue raises company capital, while an offer for sale provides proceeds to selling shareholders.

What should retail investors examine first?

The offer documents, valuation, cash generation, financial risks, use of proceeds and the investment’s fit with their own financial circumstances.

Sources

Click an article title to view the source.

• India’s FII paradox: $9.2 billion into IPOs, $39 billion pulled from listed stocks updated on 9 October 2026 in Financial Express.
• Chapter 6: Foreign Portfolio Investors published in August 2026 by SEBI; exact publication day not established.
• How to invest in Initial Public Offer? February 2025 edition, published by SEBI Investor; exact publication day not established.
• Anarock Profit Rose 53, but Cash Flow Turned Negative: What Should IPO Investors Trust More? published on 6 October 2026 in Vantage InSights.

Evidence Caveats

The underlying JM Financial tracker was not independently retrieved. Its reported flow figures remain attributed to Financial Express, and its precise transaction classification is not independently established here.

SEBI’s category definition explains why primary-market figures require careful labelling; it does not independently verify the tracker’s totals. Possible investor motives are analytical explanations, not confirmed findings. Aggregate flows cannot establish individual fund behaviour or predict an investment’s return.

Which disclosure would persuade you that an IPO is attractively priced? What evidence would change your view? Share your reasoning or counter-evidence in the attached forum discussion.

Disclaimer

This article provides general information and editorial analysis, not personalised investment advice. Securities can lose value. Investment decisions should reflect your financial circumstances, risk tolerance and time horizon.