FIIs Dump IT, FMCG, Power in 2025; Pivot to Telecom, Oil & Gas

Foreign institutional investors (FIIs) sold off heavily in 2025, recording net sales of ₹1.66 lakh crore as per NSDL's data at the end of 2025 from the previous year. The total value of assets held in equity rose approximately 4.3% to ₹74.27 lakh crore on the last day of December 2025, compared with the previous year at ₹71.19 lakh crore, indicating that investors rotated selectively into equities after experiencing stretched valuations, earnings slowdowns, geopolitical tensions, and fear of U.S. tariffs.

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Top Sectors for Net Outflows: Information Tech

The IT Sector saw the largest losses among all sectors, comprising over 45% or ₹74,700 crore of total outflows. Investors were concerned about revenues being disrupted by Artificial Intelligence (AI) and slowing Western Technology investment. Following IT in terms of outflows were Fast Moving Consumer Goods (FMCG) at 22% with ₹36,800 crore of carry away due to inflation, weakness in rural markets, and competition from quick-service foods. The Power Sector saw 16% with ₹26,500 crore leaving because of regulatory control, high debt levels, and international energy instability.

Other Factors for Selling Pressure

Healthcare was forced to sell more than ₹25,000 crore; Consumer Durables and Consumer Services more than ₹21,370 crore and ₹16,500 crore respectively. Financials (Banking and Financial Services) had net outflows of ₹14,900 crores; Realty ₹12,645 crore; and Automotive players had net sales of ₹11,900 crore due largely to the shift from Emerging Market to Developed Market assets.

Bright Spots: Telecom and Select Buys

Telecom bucked the trend in terms of FII purchases, pulling in over ₹48,222 crore due to cash flow recovery and revenue & profit growth expectations. The oil and gas, services, chemical, metals and mining sectors experienced similar inflow interest with net inflows of approximately ₹8,431 crore, ₹7,071 crore, ₹6,017 crore, and ₹4,661 crore, respectively. The main driver of this interest was the resilience of consumer demand and the undervalued nature of these sectors.

The Cycle of Rebalancing and Its Effects

The pattern that emerged in 2025 mirrors the pattern exhibited by FIIs during periods of high valuation, with IT, FMCG and Power that typically dominate, experiencing profit-taking due to the headwinds caused by AI technology and softness in overall consumption. The strong demand for Telecommunications will be driven by the roll-out of 5G technologies, while ENERGY stocks will hedge against geopolitical uncertainty. 

Domestic Mutual Funds, which have absorbed the majority of the selling pressure this year, have helped stabilise our Benchmark Indices. In 2026, we could see positive flows, but uncertainty over tariffs remains. This rebalancing reflects that India is at the stage of developing a maturing market that relies less heavily on FIIs and is becoming increasingly sensitive to Global