Foreign Investors Pivot Toward Financials and Telecom, Scale Back FMCG Holdings
Foreign institutional investors (FIIs) made significant portfolio shifts in the latter half of March, ramping up exposure in sectors like financial services, telecom, chemicals, and metals, while trimming positions in FMCG, IT, and oil & gas, according to data from the National Securities Depository Ltd (NSDL).
Financial services led the inflows with Rs 24,942 crore, marking the segment as the top pick for FIIs during the upswing. Telecom followed with Rs 5,573 crore, with notable gains also seen in chemicals (Rs 2,277 crore) and metals & mining (Rs 1,958 crore). The strategic pivot highlights renewed confidence in cyclical sectors amid macroeconomic stability and improving domestic demand.
However, FMCG stocks witnessed net outflows of Rs 3,030 crore, underscoring a shift away from traditionally defensive plays. The sector has seen moderated growth amid high valuations and subdued rural demand. IT recorded outflows of Rs 2,688 crore, while oil & gas saw Rs 1,103 crore exit, reflecting concerns over margin compression and global demand variability.
The overall foreign investment trend remained positive during the second half of March, with net inflows of Rs 35,098 crore into Indian equities. This marks a noteworthy rebound, signaling growing optimism toward India’s macro and fiscal stability despite global volatility. Analysts cite the Reserve Bank of India’s monetary policy consistency and sustained economic growth prospects as key underpinnings of investor sentiment.
Market experts suggest the FII rotation reflects a tactical reallocation toward growth-oriented sectors poised to benefit from upcoming policy tailwinds, infrastructure spends, and interest rate normalization. The pullback from FMCG may continue in the near term as investors look for stronger earnings visibility and more attractive valuations elsewhere.
For FMCG players, the shift in capital flows signals increased pressure to justify premium valuations through rural recovery, innovation pipelines, and channel expansion. The coming quarters will be critical in determining if the sector can reassert itself in the eyes of long-term institutional investors.