FIIs poured nearly Rs 50,000 crore into these sectors in last 2 months. Here’s what they bought
Foreign investors turned net buyers in India, deploying Rs 49,830 crore across sectors in July and August, with consumer services, healthcare, consumer durables, financials and IT emerging as the biggest beneficiaries. The shift reflects stronger ...
Foreign investors are back, but their bets remain highly selective.
Foreign investors are back in India, and their money is moving decisively into consumption-led sectors, healthcare and financials. FIIs deployed a net Rs 49,830 crore across sectors in July and August, with consumer services alone accounting for more than a third of the total buying.
The shift comes as the chip trade tapers and foreign portfolio investors turn consistent sellers in semiconductor stocks in South Korea and Taiwan, helping redirect flows toward India. The resilience of the Indian economy, a better-than-expected 7.8% Q1 FY27 GDP growth rate, stronger-than-expected Q1 earnings and a stabilising rupee have further supported the turnaround in sentiment.
Consumer services emerged as the biggest beneficiary, attracting Rs 18,618 crore in FII money over the two months. Healthcare followed with Rs 13,686 crore, while consumer durables drew Rs 11,245 crore. Financials and IT received Rs 9,800 crore and Rs 7,461 crore, respectively, according to NSDL data.
Together, these five sectors accounted for Rs 60,810 crore of buying, offset by selling elsewhere in the market.
The data points to a clear preference for domestic-facing businesses over several sectors exposed to higher capital requirements, regulatory overhangs or weaker near-term cash flows.
Consumer services attracted Rs 10,201 crore in July and another Rs 8,417 crore in August, making it the strongest FII trade in the two-month period.
The buying reflects a broader shift in spending patterns, according to SBI Securities. Higher disposable incomes are driving aspirational consumption across high-end fashion, luxury cosmetics and premium organised retail. Consumer preferences have also shifted toward leisure travel, upscale dining and hospitality.
The brokerage highlighted the rapid adoption of instant-delivery platforms and online retail applications as a structural change in urban consumption. Widespread smartphone access and frictionless UPI payments have also brought millions of daily transactions into the formal digital economy.
Stocks showing positive price-action structures in the segment include Entero, Eternal, Indian Hotels, Naukri, Leela Hotels, Lenskart, TBOTek and Urban Company.
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The scale of the flows suggests that foreign investors are not merely rotating into traditional consumption names. They are also seeking exposure to newer platforms and businesses linked to formalisation, digital payments, travel and premium spending.
Healthcare was the second largest destination for FII money, with inflows of Rs 7,755 crore in July and Rs 5,931 crore in August.
SBI Securities said the Nifty Healthcare Index continues to form higher highs, indicating a strong uptrend. The rising ratio of the Healthcare Index to the Nifty also signals continued outperformance, while the ADX shows sustained buyer control.
The index remains in the leading quadrant of the Relative Rotation Graph, indicating strong relative strength and momentum. The 16,350–16,300 zone is likely to act as immediate support, with the positive trend expected to remain intact as long as the index holds above that level.
Divis Laboratories, Glenmark, Ipca Laboratories, Laurus Labs, PPL Pharma and Zydus Life were among the stocks showing a positive price-action structure.
The sector’s strong performance, however, contrasts with Morgan Stanley’s broader preference. The brokerage favours domestic cyclicals over defensives and externally facing sectors, while remaining underweight healthcare, energy, materials and utilities.
Consumer durables remain a major draw
Consumer durables attracted Rs 7,342 crore in July and Rs 3,903 crore in August, taking total two-month inflows to Rs 11,245 crore.
That puts the sector ahead of financials, IT and metals in the FII shopping list. The positioning reinforces the broader preference for domestic consumption and discretionary spending, alongside consumer services.
Financials make a comeback
Financials attracted Rs 9,800 crore over the two months, but the flows were concentrated in August. The sector saw an outflow of Rs 694 crore in July before receiving Rs 10,494 crore in August.
SBI Securities described the trend as a sign that foreign investors are finding their way back to financial services. The return of FPI inflows in June and their continuation into August suggest that selling pressure has eased, with investors gradually rebuilding exposure to the sector.
The financial services index has been consolidating in the 25,671–27,127 range for the past two and a half months. A decisive breakout on either side of that range could provide the next directional cue.
September has historically been a strong month for the sector, with the index ending higher in 12 of the last 20 years and delivering an average gain of 3.03%, according to SBI Securities.
Kotak Bank was among the stocks showing a positive price-action structure.
Morgan Stanley is also overweight financials, while Jefferies said it remains overweight lenders. Jefferies expects earnings growth to improve as credit growth recovers, the drag from net-interest-margin compression fades and credit costs remain broadly stable.
IT and metals also see sustained buying
Information technology attracted Rs 3,358 crore in July and Rs 4,103 crore in August, taking the two-month inflow to Rs 7,461 crore.
Morgan Stanley described IT services as a potential “dark horse” as companies increasingly build artificial-intelligence applications and solutions.
Metals received Rs 4,937 crore in July and Rs 1,807 crore in August, for a total buying of Rs 6,744 crore. Jefferies identified metals as its preferred sector, while also favouring lenders and real-asset and investment-cycle beneficiaries such as power, ports, hospitals and real estate.
Telecom bears the brunt of selling
While foreign investors aggressively bought consumer-facing sectors, telecom recorded the largest outflow in the two-month period.
The sector saw selling of Rs 5,725 crore in July and Rs 4,983 crore in August, taking the total outflow to Rs 10,708 crore.
SBI Securities said continuous investment requirements for pan-India 5G infrastructure and spectrum renewals are weighing heavily on near-term free cash flows. Actual 5G revenue generation, including average revenue per user growth, has also been slower than projected.
Legacy issues, particularly disputes over adjusted gross revenue dues and statutory payment timelines, continue to create the risk of sudden legal and financial liabilities.
Telecom is also heavily dependent on domestic revenues while carrying dollar-denominated import costs such as network equipment, putting pressure on net profit margins relative to export-oriented sectors such as IT and pharmaceuticals.
Bharti Airtel, Bharti Hexacom, ITI, Indus Towers, RailTel and Route Mobile showed weak price-action structures.
Capital goods, power and FMCG remain out of favour
Capital goods recorded a net outflow of Rs 5,669 crore over the two months, despite receiving Rs 606 crore in August. The sector had seen selling of Rs 6,275 crore in July.
Power saw a combined outflow of Rs 4,416 crore, while FMCG recorded selling of Rs 2,544 crore. Oil and gas registered an outflow of Rs 2,016 crore, and auto stocks saw selling of Rs 1,458 crore.
The pattern creates a sharp contrast with Jefferies’ preference for real assets and investment-cycle beneficiaries, including power, ports, hospitals and real estate. It also differs from Morgan Stanley’s broader preference for industrials, even as the data shows foreign investors were net sellers in capital goods during the two-month period.
Why foreign flows are returning
The return of FII money has been supported by a combination of domestic resilience and a change in global positioning.
India’s 7.8% Q1 FY27 GDP growth, better-than-expected first-quarter earnings and a stabilising rupee have strengthened the case for renewed foreign allocations. The Rs 127 billion that came into India under the FCNR (B) scheme also helped the rupee recover from a low of 96.96 to the dollar in May.
The latest sector data suggests that foreign investors are not returning indiscriminately. Their buying is concentrated in consumption, healthcare, financials, IT and metals, while telecom, capital goods, power and select commodity-linked sectors remain under pressure.
For now, the message from the flows is clear: FIIs are back, but they are being selective. (Data: Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of The Economic Times.)
