Foreign institutional investors (FIIs) were net sellers of $3 billion in June, while domestic institutional investors (DIIs) were net buyers of $9 billion in the Indian equity market, as per a report. Over the past year, Indian primary markets saw FII net inflows of $8.1 billion, while secondary markets experienced FII net outflows of $49.3 billion, according to the report by JM Financial Institutional.
In June, the top 5 sectors in terms of FII shareholding were BFSI, Capital Goods, Pharma, Auto, and Oil and Gas. These sectors collectively account for 60% of FII assets in India, with sequential increases in BFSI and Pharma shareholding and decreases in Capital Goods, Auto, and Oil & Gas.
BFSI remains the largest sector in terms of FII assets under custody (AUC) in India at 30.8%, up from 29.5% in May. Capital Goods follows at 7.5%, down from 7.6% in May, while Pharma is at 7.4%, up from 7.1% in May. In June, BFSI saw inflows of $357 million, with durables, services, and realty following suit.
Analysts anticipate institutional flows to be influenced by various domestic and global factors in the near future. Key factors include monitoring the monsoon season’s progress for its impact on rural demand, agricultural output, and inflation trends. The upcoming Q1FY27 corporate earnings season is expected to offer insights into corporate health and earnings growth sustainability.
Global factors like crude oil price movements and developments in US-Iran peace talks will also be significant, affecting inflation expectations, energy costs, and overall risk sentiment. Despite existing risks such as earnings growth estimate revisions and monsoon-related inflation concerns, market observers suggest that much of the visible uncertainty is factored in, allowing for a positive outlook on incremental developments.
