The 12-month FII flow data in FY26 reveals a market where selling has been the dominant theme, with 10 out of 16 sectors recording net outflows over the period.
Where FIIs are Trimming: The Major Exits
The selling has been in sectors that have historically been the bedrock of foreign portfolios.
- Technology & IT Services: This has been the hardest-hit sector over the past 12 months, with outflows totalling USD – 9,222 million.
- BFSI (Banking & Financials): Once the FII favourite, this sector saw USD – 6,056 million in outflows over the last 12 months.
- Domestic Consumption: High-weight sectors like FMCG (-USD 3,744 million) and Automobiles (-USD 1239 million) have seen consistent pressure as FIIs moved away from domestic consumption themes.
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The breadth of this retreat indicates a systematic reduction in India exposure rather than a reaction to isolated company fundamentals. Perhaps the most striking revelation is the complete decoupling of these exits from corporate earnings. Even the market’s strongest EPS compounders are being trimmed, with net selling across 41 out of 50 Nifty-50 stocks signalling a high-level macro decision to cut regional allocations rather than a response to individual growth trajectories
Pockets of Conviction: Where FIIs are Buying
Despite the general trend of selling, FIIs are selectively doubling down on sectors linked to India’s industrial and infrastructure cycles.
- The Manufacturing Cycle: There is a clear preference for Capital Goods (+USD 2,894 million inflow over the last year)
- Telecom saw FIIs inflow of USD 2914 million over the last year.
- Metals saw FIIs inflow of USD 2247 million over the last year.
While the exit from banking and technology captures the headlines, the internal rotation reveals a transition that global capital is shifting away from domestic-sensitive and rate-sensitive financials in favor of sectors that offer more stable, globally comparable growth profiles.
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