FII Flows Turn Towards Consumer Services, Metals & Healthcare in Early July

Institutional investors from abroad (FII’s) increased their shareholding in Indian equities through July, the first half of which saw investor preference for consumer services, metals & mining, healthcare, realty, and financials. This buying trend came following consistent flows in the second half of June, which suggested continued participation from foreign players.

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The latest data on sectoral allocations revealed that the foreign institutional investors had bought stocks worth nearly ₹15,559 crore during the first two weeks of July after having invested ₹14,105 crore in the second half of June. This interest in stocks was seen at a time when valuations were favorable, oil prices were moving lower, and worries of a US-Iran war had subsided. 

Before looking at sector-wise trends, it is worth noting that foreign investor positioning in Indian equities remains below historical averages, leaving room for incremental allocations as sentiment improves.

Consumer Services Led FII Buying

Consumer services attracted the highest inflows for the second consecutive fortnight, with FIIs investing ₹7,361 crore compared with ₹3,081 crore during the previous fortnight.

Metals and mining witnessed one of the sharpest reversals in institutional flows. After recording net selling of more than ₹4,370 crore in the second half of June, the sector received fresh investments worth ₹5,993 crore in the first half of July.

Healthcare also remained among the top beneficiaries, attracting inflows of ₹4,101 crore. The services sector followed with net buying of ₹2,405 crore, reflecting continued interest across multiple domestic growth themes.

Realty and Financials Continued to Attract Interest

Realty, consumer durables, financials and construction materials also remained in favour among overseas investors. Consumer durables received inflows of ₹2,384 crore, while both realty and financials recorded investments of ₹1,975 crore each. Construction materials attracted ₹1,574 crore after witnessing net outflows in the previous fortnight.

These continued purchases showed that the FIIs were diversifying their investments across other sectors as well.

High Selling Pressure in Auto Industry

While the net inflow in most sectors was positive, there were still some sectors witnessing net selling activities. The auto sector witnessed the highest selling pressure by FIIs, who had offloaded shares worth ₹6,936 crore, which was much more than the selling of ₹1,324 crore in the last half of June.

The capital goods and telecom sectors also witnessed selling pressures worth ₹2,657 crore and ₹2,454 crore, respectively. Power and FMCG stocks witnessed selling worth ₹1,267 crore and ₹1,106 crore.

The sector-wise flow pattern suggests that while overseas investors continued adding exposure to Indian equities in early July, allocations remained selective, favouring sectors linked to domestic consumption, healthcare and metals while reducing positions in automobiles, capital goods and other cyclical segments.