FIIs Rotate Into Auto, Telecom, and IT in Late June; Continue Selling in Power and FMCG

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Last Updated: 4th July 2025 - 05:33 pm

2 min read

Foreign institutional investors (FIIs) shifted gears in the second half of June, turning net buyers in sectors like auto, telecom, IT, and financials, while continuing to pare exposure in power, FMCG, and consumer durables. The move reflects a tactical reallocation of capital from defensives to growth-driven sectors ahead of the July earnings season.

Sector-Wise FII Flows: June 16–30

Sector H2 June Flow (₹ crore) H1 June Flow (₹ crore)
Auto +5,020 –296
Telecom +3,620 –887
IT +2,800 –1,700
Consumer Services +2,800 –1,460
Oil & Gas +4,938 +1,199
Financial Services +4,261 +4,685
Chemicals +987 +1,405
Realty / Construction +910 / +842 Not disclosed
Metals +201 Not disclosed
Power –3,191 –3,120
Consumer Durables –600 –1,893
FMCG –359 –3,626

Source: NSDL (as reported by Moneycontrol)

What's Behind the Reversal?

The rebound in auto, telecom, and IT stands out particularly because FIIs were net sellers in these same sectors in early June. Analysts say several factors likely contributed:

  • Rotation from defensives: After strong YTD gains in sectors like power and FMCG, FIIs may be booking profits and reallocating to sectors offering better growth traction.

  • Improved growth visibility: Renewed interest in auto and telecom suggests investors are pricing in stronger volume growth, margin expansion, and demand revival in H2.

  • Global tech momentum: The bounce in IT is also tied to improved sentiment toward global tech and digital services, especially as U.S. recession fears ease.

In oil & gas, foreign funds added nearly ₹5,000 crore in H2—versus ₹1,200 crore in H1—reflecting confidence in energy demand stabilisation and pricing visibility.

Sector Takeaways

  • Auto and telecom together saw inflows of over ₹8,600 crore after seeing net outflows in H1 June, signaling a meaningful sentiment reversal.

  • IT and consumer services also saw close to ₹5,600 crore in net inflow reversal, led by increased interest in digital, travel, and services-related plays.

  • Power and FMCG continued to be out of favour, with combined outflows of nearly ₹4,000 crore in the latter half of June alone.

While financials remained a steady FII favourite throughout June, flows into real estate, construction, and metals also picked up modestly in H2.

What to Watch Next

  • Corporate earnings from July onwards will be a key trigger. Sectors like the auto sector, IT sector, and telecom will need to justify the renewed inflows with performance.

  • Macro indicators such as inflation, Fed commentary, and oil prices will continue to guide FII allocations in commodities and energy.

  • Power and FMCG may need fresh catalysts—either valuation resets or government policy cues—to reverse the trend of persistent outflows.

Conclusion

FIIs closed out June with a clear preference shift—rotating into sectors that offer leverage to economic momentum and stepping away from overbought defensives. While foreign flows remain sensitive to global risk cues, the recalibration suggests that investors are positioning for a more balanced risk-reward profile across Indian equities in the months ahead.

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