FIIs Invest ₹26,000 Crore in March-End, Focus on Financials, Telecom, Core Sectors

Foreign Institutional Investors (FIIs) have re-emerged as significant participants in Indian equity markets in the second half of March 2025, making aggressive allocations into select sectors after months of net selling. According to data released by the National Securities Depository Limited (NSDL), FIIs pumped over ₹26,000 crore into Indian equities during the period from March 16 to March 31. Notably, the lion’s share—nearly ₹17,600 crore, or about 67 percent of the total inflow—was directed toward financial services, highlighting a renewed confidence in the sector ahead of the Q4 FY25 earnings season.

This surge in capital comes after FIIs had cumulatively offloaded more than ₹38,000 crore worth of financial stocks in the first two and a half months of 2025. The reversal in sentiment suggests a strategic repositioning by global investors anticipating improved performance from Indian banks and non-banking financial companies (NBFCs) amid favorable treasury movements and forex gains.

Surge in Financial Investments Tied to Earnings Expectations and Macro Cues

The heavy infusion into financial services is being widely attributed to a set of supportive macroeconomic indicators and upcoming earnings announcements for the March quarter. Analysts expect Indian banks to post strong numbers on the back of increased treasury gains due to falling government bond yields, and improved foreign exchange income amidst persistent currency volatility. The combination of lower yields and robust credit growth, particularly in the retail and MSME segments, is expected to boost profitability for both public and private sector lenders.

Investment strategists believe that FIIs are positioning early to benefit from a likely rerating in bank stocks, especially given that valuations remain reasonable compared to historical averages. The renewed FII interest also signals global investors’ belief in the structural resilience of India’s banking sector, underpinned by strong capital adequacy ratios and a gradual improvement in asset quality.

Highlights:

• ₹17,585 crore invested in financial services by FIIs from March 16–31

• Sharp reversal from ₹38,000 crore of financial sector outflows YTD till mid-March

• Q4 FY25 results expected to reflect gains from falling yields and forex operations

Continued FII Support Seen in Telecom, Chemicals, and Industrial Commodities

Apart from the financial sector, FIIs maintained their bullish stance on telecom, metals & mining, and the chemicals segment. Telecom stocks saw a robust ₹3,413 crore inflow during the second half of March, indicating sustained optimism around subscriber growth, tariff hikes, and 5G monetization. The broader industrial economy also saw renewed enthusiasm, with the chemicals sector attracting ₹620 crore and metals & mining receiving ₹722 crore.

These sectors benefit from global macro trends, including rising commodity prices, increased capex cycles across emerging economies, and favorable export demand. The telecom sector, in particular, has become attractive for FIIs due to reduced competitive intensity, improving Average Revenue Per User (ARPU), and lower capital expenditure requirements following major 5G infrastructure rollouts.

Highlights:

• Telecom attracted ₹3,413 crore in FII inflows during March 16–31

• Chemicals and metals continue to benefit from global supply-side trends

• Sectors seen as key enablers of India’s industrial and digital transformation

Strategic Re-entry into Healthcare, Power, and Capital Goods After Months of Exit

FIIs also made selective comebacks into sectors they had previously exited. Healthcare saw fresh inflows of ₹2,138 crore during the latter half of March, reversing a prolonged trend of net outflows. Similarly, the power sector, capital goods, and the automobile industry drew ₹1,627 crore, ₹1,613 crore, and ₹776 crore respectively, reflecting rising investor optimism around India’s domestic consumption story and infrastructure-led growth.

This marked shift signals an evolving FII strategy that now includes a broader spectrum of growth-focused and value-oriented sectors. Power and capital goods, in particular, are riding on the momentum created by government-led infrastructure spending, rising electricity demand, and increased private sector participation in energy transition projects.

Highlights:

• ₹2,138 crore flowed into healthcare sector after consistent earlier selling

• Capital goods and power sectors received over ₹1,600 crore each

• Automobiles also saw fresh buying, reversing earlier negative sentiment

Continued Outflows in IT, Oil & Gas, FMCG, and Consumer Services

While inflows were significant in some sectors, others continued to witness persistent selling pressure. FIIs remained net sellers in information technology (IT), oil & gas, fast-moving consumer goods (FMCG), and consumer services. In particular, IT stocks saw an outflow of ₹1,517 crore during the period, as concerns around global IT spending cuts and margin compression weighed heavily on investor sentiment.

Oil & gas witnessed an outflow of ₹2,449 crore, marking one of the steepest sectoral withdrawals, likely due to regulatory uncertainties, volatile crude prices, and concerns about subsidy under-recoveries in the state-run energy firms. FMCG and consumer services too recorded exits worth ₹487 crore and ₹1,158 crore, respectively, continuing the FII trend of rotating out of defensives into more cyclical and high-beta sectors.

Highlights:

• IT sector saw continued selling with ₹1,517 crore in outflows

• Oil & gas recorded one of the highest outflows at ₹2,449 crore

• FMCG and consumer services remained under pressure due to valuation concerns

Mid- and Small-Cap Indices Outperform as Market Recovers from March Lows

The recent resurgence in FII inflows coincides with a broad recovery across Indian markets. Since mid-March, benchmark indices like the Nifty 50 and BSE Sensex have risen by more than 5 percent, while the BSE MidCap and SmallCap indices delivered returns exceeding 6.3 percent each. The broader market rally suggests that investors—both domestic and foreign—are finding value beyond large-cap names, particularly in sectors aligned with the government’s long-term development agenda.

While volatility persists amid global macro concerns and domestic policy risks, the return of FII flows provides a positive undertone for Indian equities heading into the earnings season. Institutional demand, especially from long-only global funds and sovereign wealth vehicles, may further firm up as clarity emerges on corporate earnings, inflation trajectories, and interest rate policies in the U.S. and India.

Highlights:

• Sensex and Nifty gained over 5% since March 15

• BSE MidCap and SmallCap indices rose over 6.3% in same period

• FIIs increasingly diversifying into high-growth mid-cap stocks and cyclical plays