Business EconomyPosted at: Jul 9 2025 6:54PM


FPIs re-enter India equities as auto, IT financials lead inflows

Mumbai, July 9 (UNI) India's equity markets are witnessing a recalibrated approach by foreign portfolio investors (FPIs), as capital flows shift tactically across sectors. After recording cumulative outflows of over Rs 15,700 crore between January and May, FPIs made a notable return in the latter half of June, with selective re-entry into sectors like automobiles, IT, oil & gas, and financials.
According to market data, the automobile sector has become the biggest beneficiary of this rotation, garnering Rs 5,020 crore in foreign inflows during the final 15 days of June.
Analysts attribute the renewed interest to falling interest rates, recovering rural demand, and valuation comfort. With auto stocks previously underperforming, foreign investors are now positioning themselves ahead of a potential upcycle.
The IT sector, which faced sharp FPI outflows of Rs 31,766 crore earlier this year, saw a reversal of sentiment with inflows worth Rs 2,879 crore in late June. Market participants link this turnaround to the limited impact of US tariffs on services and a stabilising India-US trade dialogue, which has reinforced foreign investor confidence in India’s export-oriented tech sector.
Similarly, oil and gas and financials each attracted over Rs 4,000 crore in inflows, supported by cooling global crude prices and domestic liquidity infusions by the Reserve Bank of India (RBI). This has sparked optimism around macroeconomic stability, further boosting capital inflows into these sectors.
However, the reallocation also saw FPIs pulling out Rs 3,191 crore from power and Rs 3,022 crore from capital goods. Analysts suggest that early monsoon-led demand moderation in electricity and lingering project execution concerns have led to reduced foreign appetite, despite ongoing infrastructure investments.
Brokers and economists note that the shift is not driven by sentiment, but by valuations and yield expectations. "This is not an exit, but a recalibration — a refined re-entry by global investors into pockets of conviction," said a market strategist at Bajaj Broking Research.
The broader FPI outlook remains moderately positive, with sector-specific flows expected to persist.
Key factors likely to guide foreign flows in the coming quarters include anticipated interest rate cuts by the US Federal Reserve, developments in India's bilateral trade landscape, and the continuing shift in global capital allocation amid de-dollarisation trends. India’s perceived resilience and economic momentum have strengthened its case as a long-term investment destination.
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Tags: #FPIs re-enter India equities as auto# IT financials lead inflows
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