FPI Flows in June 2025: Telecom, Services Shine While IT and Healthcare See Heavy Outflows

Net equity inflows stand at $816 million, but sectoral divergence suggests cautious optimism

June 2025 Starts on a Positive Note for FPI Flows

Foreign Portfolio Investors (FPIs) have started June 2025 on a mildly optimistic note. According to NSDL data, FPIs were net buyers of $816 million in Indian equities during the first fortnight of June. While this is a solid number, it is still only half of what was recorded in the first half of May 2025.

This follows a trend reversal from March and April, where FPIs were net sellers in the first half and compensated with buying in the second. In addition to equities, debt markets witnessed strong FPI interest, with net inflows of $2.1 billion in the same period.

However, despite the buying, the Assets Under Custody (AUC) data shows a slight dip. As of June 15, 2025:

• Equity AUC stood at $831 billion (vs. $833 billion on May 15)
• Overall AUC (including debt and hybrid) dropped to $907 billion (vs. $912 billion)

A Balanced but Divergent Sectoral Picture

Sectorally, the FPI participation was quite balanced but divergent. Out of 23 sectors tracked by NSDL:

• 11 sectors saw net FPI buying
• 11 sectors witnessed net FPI selling
• 1 sector (Textiles) remained neutral

Interestingly:

• Only 2 sectors attracted net inflows of over $500 million
• 6 sectors witnessed net outflows of more than $100 million
• Of these, 4 sectors had outflows greater than $200 million

The divergence is not just numerical. It reflects caution amid global macro risks, including Indo-Pak tensions, the Israel-Iran conflict, and uncertainty around tariffs and energy prices.

Sector-Wise FPI Flows - First Half of June 2025

Source: NSDL | Period: June 01–15, 2025

Sectoral Drivers Behind FPI Bets and Exits

Telecom Takes the Lead

With $825 million in net inflows, the telecom sector led FPI activity. Stocks like Bharti Airtel, Vodafone Idea, and TCOM were in focus, possibly due to growth in data consumption and tariff stability.

Services Sector Attracts Big Bets

FPIs infused $727 million into the services space. This was largely driven by optimism around Swiggy and Eternal, especially as Zepto showed signs of financial stress.

Capital Goods Benefit from Capex Theme

With a net inflow of $362 million, the capital goods sector benefited from investor confidence in sustained government infrastructure spending in FY26.

Top Sectors Facing FPI Selloff

Information Technology (IT): -$319 Million

IT led the sell-off. FPIs pulled out as margin pressures and a weaker dollar index weighed on earnings outlook.

Healthcare: -$235 Million

Concerns over US trade policy spooked investors. Donald Trump’s tariff threats on Indian pharma exports - a $9 billion market - triggered FPI exits.

Power: -$208 Million

Despite growing demand, there are concerns over whether India’s power output can keep pace. FPIs trimmed exposure to energy utilities accordingly.

Outlook: The Real Test Lies in H2-June

While the first fortnight of June 2025 showed net positive inflows, the broader story remains uncertain and evolving. The sharp spike in oil prices globally, alongside geopolitical risks, could affect flows in the second half of the month.

Investors will closely watch:

• Movement of crude oil and its impact on India’s macros
• Resolution (or escalation) of border and trade tensions
• US Fed commentary on interest rates and dollar strength

Disclaimer: The content in this article is for informational and educational purposes only and should not be construed as investment advice. Please consult a registered financial advisor before making any investment decisions.