FPI Heatmap: IT, FMCG lead outflows, while Services, Metals draw inflows in July. Here’s where the smart money is going

Foreign portfolio investors (FPIs) turned net sellers in the Indian stock market in July 2025, marking a pause after three consecutive months of inflows. This shift comes after FPIs began FY26 on a positive note with cumulative net inflows of ₹38,673 crore in April, May, and June.

As per NSDL data, FPIs withdrew ₹1,446 crore from the Indian equity markets during the first fortnight of July 2025. This compares with net investments of ₹14,590 crore in June alone.

While FPIs continued to participate actively in the primary market — especially through Qualified Institutional Placements (QIPs) — they offloaded shares in the secondary market, citing stretched valuations and India’s relative underperformance versus other emerging markets and the MSCI EM Index.

FPIs Turn Cautious in July; IT, FMCG, Autos Witness Heavy Selling

After three straight months of steady inflows, foreign portfolio investors took a more cautious stance in July 2025, pulling out ₹1,446 crore from Indian equities during the first half of the month. The shift in sentiment was most evident in the secondary market, where FPIs trimmed exposure to sectors with elevated valuations and rotated funds into select cyclical and services-oriented plays.

Top Sectors Witnessing FPI Outflows (July 1–15)

Information Technology (IT): The IT sector saw the largest outflow, with FPIs selling stocks worth ₹5,479 crore in the first fortnight of July, NSDL data showed. This is a sharp reversal from June, when the sector recorded net inflows of ₹1,166 crore — primarily in the latter half.

Fast-Moving Consumer Goods (FMCG): FMCG stocks continued to face pressure, with FPI outflows of ₹1,428 crore in early July. This adds to the ₹3,985 crore that exited the sector in June, suggesting sustained bearishness driven by high valuations and muted consumption trends.

Consumer Durables: The Consumer Durables segment saw net outflows of ₹1,292 crore in July’s first half, following a ₹2,493 crore sell-off in June, indicating ongoing profit booking.

Automobile and Auto Components: Autos sector faced ₹1,159 crore in net FPI selling, reversing the previous month’s strong inflow of ₹4,724 crore, according to data on NSDL.

Healthcare: Healthcare stocks witnessed FPI outflows of ₹757 crore in early July, continuing the trend from June, when the sector saw net selling of ₹403 crore.

Top Sectors Witnessing FPI Inflows (July 1–15)

Services: The Services sector emerged as the biggest beneficiary of FPI inflows in July so far, with net buying worth ₹2,733 crore. This is a significant jump from ₹346 crore inflows seen in June.

Metals & Mining: Metals & Mining saw a turnaround in sentiment, with FPIs pumping in ₹1,724 crore, compared to net outflows of ₹357 crore in June. The uptick may reflect a rebound in global commodity prices.

Consumer Services: FPIs invested ₹953 crore in Consumer Services in early July, sustaining momentum from June’s inflow of ₹1,348 crore, driven by a shift toward experiential and service-oriented consumption.

Oil, Gas & Consumable Fuels: After drawing ₹6,137 crore in June, the Oil & Gas sector continued to attract FPI interest with ₹905 crore in net inflows.

Capital Goods: Capital Goods received ₹922 crore in FPI inflows in July’s first fortnight, partially offsetting the ₹1,831 crore net outflows recorded in June. This could signal renewed interest in infrastructure-related themes.

Financial Services: The Financial Services sector remained resilient, attracting ₹820 crore in July after leading the June inflows with ₹8,946 crore. The sector continues to benefit from robust credit growth and strong Q1 earnings outlook.

Sectoral Rotation Evident in FPI Strategy

A clear pattern of sectoral rotation is visible in FPI flows between June and July. Investors appear to be moving away from defensives like FMCG, IT, and Healthcare, while increasing allocations to cyclicals such as Metals, Capital Goods, and Services.

The growing interest in primary market offerings and selective positioning in undervalued sectors suggests FPIs are adopting a more nuanced, valuation-conscious approach amid global uncertainty and rising geopolitical risks.

With Q1 results season underway and global central bank actions in focus, FPI flows in the coming weeks will likely remain sensitive to both domestic performance metrics and external macro triggers.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.