Foreign Investors Make Strong Comeback with Significant Inflows in Financial Sector During Mid-June
Foreign Portfolio Investors (FPIs) have returned to the Indian equity market, showing renewed interest in financial stocks. In the second half of June, FPIs purchased shares worth Rs 14,634 crore after selling Rs 11,263 crore in the first half of the month. This shift marks the largest fortnightly investment by foreign investors in the financial sector in 2026 and their first net buying in this segment since February.
Factors Behind the Reversal
The reversal in FPI sentiment was driven by inflows related to the rebalancing of global equity indices and value buying. According to NSDL data, overseas investors emerged as net buyers of Indian equities worth over Rs 14,000 crore during the June 16-30 period, reversing the net outflows of Rs 63,450 crore recorded in the first half of June. Sriram Velayudhan, Senior Vice-President at IIFL Capital Services, noted that the inflows were partly influenced by the FTSE June 2026 review and reflected active buying.
Financial stocks had previously experienced significant foreign outflows due to their substantial weight in India’s equity markets. The easing of selling by foreign investors coincided with signs of de-escalation in the West Asia conflict, leading to fresh inflows into banks and financial services.
Continued Interest in Financial Services
The financial services sector accounts for nearly 40% of the benchmark index, making it a focal point for investment flows. Vikas Gupta, CEO of OmniScience Capital, stated that the sector is large, liquid, and has strong growth prospects, which makes it attractive to long-term investors, including FPIs. Gupta emphasized that financial services and infrastructure are preferred sectors due to their growth visibility and current undervaluation.
In addition to financials, FPIs were net buyers in sectors such as construction, consumer services, and healthcare, with net purchases ranging from Rs 1,400 crore to Rs 3,400 crore. However, they remained net sellers in sectors like automobiles, capital goods, and metals, offloading shares worth between Rs 1,300 crore and Rs 4,300 crore. The pace of selling in information technology stocks slowed during the latter half of June.
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