This comes against the backdrop of sustained foreign outflows of over Rs 1 lakh crore, triggered by rising US bond yields, a weakening rupee, and elevated crude oil prices following the Iran conflict. With Brent crude hovering near $100 per barrel and US yields nearing 4.5%, the risk-reward equation for emerging markets like India has weakened, prompting a shift in global capital allocation. India has seen persistent outflows even as other emerging markets began to stabilise.
Yet, within this cautious stance, FIIs have selectively increased exposure to companies where earnings visibility, sector tailwinds, or structural growth narratives remain intact.
Retail, financials see strong inflows
Among the biggest beneficiaries was Vishal Mega Mart, where FII holding jumped sharply by 6.48% to 22%. The move suggests continued confidence in value retail, a segment that has shown resilience even during consumption slowdowns.
Home First Finance also saw a notable increase, with FII stake rising 4.9% to 45.72%. The affordable housing finance segment continues to attract long-term investors, given strong demand fundamentals and relatively lower credit risk.
Max Financial Services, a key player in the life insurance space, saw FII ownership increase by 2.75% to 47.88%, reflecting sustained interest in financialisation themes and insurance penetration in India.
Manufacturing and industrial plays in focus
APL Apollo Tubes witnessed a 4.4 percentage point increase in FII holding to 37.5%, indicating confidence in infrastructure-linked plays and structural demand in steel tubes.
Clean Science and Technology saw FII stake rise by 3.37% to 13.38%, highlighting continued interest in specialty chemicals, a sector that benefits from global supply chain diversification. UPL also attracted inflows, with FII holding increasing by 2.94% to 41.78%, even as the agrochemical sector faces cyclical challenges.
Other stocks where FIIs raised stakes include Acutaas Chemicals (up 2.81%), The Great Eastern Shipping Company (up 2.74%), Indian Energy Exchange (up 2.74%), and Tata Elxsi (up 2.51%).
Analysts say the spread of investments across sectors — from shipping and energy exchanges to technology services — indicates a diversified approach rather than a concentrated sectoral bet.
Shipping companies like Great Eastern are likely benefiting from domestic manufacturing theme, while IEX remains a proxy play on India’s evolving power markets. Tata Elxsi, despite valuation concerns, continues to attract interest for its exposure to high-growth areas like automotive software and digital engineering.
The divergence between broader FII outflows and selective stock-level inflows reflects a shift from passive allocation to active stock picking. With India losing relative attractiveness to markets like South Korea and Taiwan on earnings growth expectations, foreign investors appear to be reallocating rather than exiting entirely.
Currency depreciation has further complicated returns for dollar-based investors, effectively acting as a drag on gains. However, companies with strong earnings visibility, domestic demand drivers, or global niche positioning continue to stand out.
Also read: Reliance Industries shares down over 15% from peak. Can Q4 results, Jio IPO turn things around?
In the future, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said the trajectory of foreign flows will hinge on developments in West Asia and oil prices. A meaningful peace could stabilise India’s macro conditions, but a prolonged conflict would continue to weigh on investor sentiment and delay any return of sustained FII inflows.
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