New Delhi, May 24 : Stabilisation of the rupee and improvement in the prospects of earnings growth can bring foreign institutional investors (FIIs) back to Indian stock markets, analysts said on Sunday.

The FII selling stood at Rs 30,374 crore (in May to date), taking the total FII selling in 2026, so far, to Rs 222,343 crore.

This is higher than the total sell figure of Rs 166,283 crore for 2025.

â??The important question is: when will the FIIs turn buyers in India. It is important to understand the principal reasons behind this sustained selling,â?? said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

The factors are poor earnings growth in India, much better earnings growth and prospects for earnings growth in other markets, high bond yields, particularly in the US, and rupee depreciation.

â??These factors, at least some of them, should change in Indiaâ??s favour for the FIIs to turn buyers in India,â?? said the analyst.

Even while selling largecaps, FIIs have been buying in SMIDs (small and mid-cap equities) where growth and earnings prospects are good. This means earnings is the primary factor.

â??An important takeaway from Q4 results is that there are indications of earnings recovery,â?? the analyst said.

Domestic institutional investors (DIIs) remained net buyer in all the five-trading session during last week, with net inflow of Rs 16,950 crore.

Benchmark indices traded choppy with high volatility swinging between gains and losses, as investors navigated heightened market uncertainty and mixed cues across sectors.

Meanwhile, the rupeeâ??s recent weakness may have less to do with oil prices or the current account deficit (CAD), and more to do with domestic investors relentlessly buying equities through SIPs, according to Jefferies.

In a note, the global brokerage said heavy foreign selling in Indian equities, combined with strong domestic inflows, has emerged as the key driver behind pressure on the rupee.

/IANS