Foreign Institutional Investors (FIIs) turned selective in the first half of December, sharply cutting exposure to financials, IT and FMCG, while rotating capital into oil & gas, metals and auto stocks.
Where FIIs sold
- Financials: The heaviest selling pressure, reflecting concerns around near-term earnings visibility, margin pressures, and rich valuations after the recent run-up.
- IT & Services: Continued outflows amid global growth uncertainty, cautious enterprise spending, and currency volatility.
- FMCG: Profit-taking in defensives as valuations remain elevated and volume growth stays modest.
Where FIIs bought
- Oil & Gas: Steady inflows on expectations of improving refining margins, strong cash flows, and policy tailwinds.
- Metals: Buying driven by hopes of a global cyclical upturn, a softer dollar, and signs of recovery in commodity demand.
- Automobiles: Selective accumulation, especially in names linked to premiumisation and export recovery, despite near-term demand concerns.
What this rotation signals
- A shift from defensives and expensive large caps to cyclicals and value-oriented sectors.
- FIIs appear to be positioning for a global growth stabilisation theme rather than chasing safety.
- The divergence also suggests stock- and sector-specific allocation, not a blanket risk-off move.
Market takeaway
Near-term volatility may persist in financials and IT due to continued FII selling, but sustained domestic flows could cushion downside. Meanwhile, oil & gas, metals and select autos may remain relatively resilient if global cues stay supportive.
If you want, I can break this down into stock-level impact, Bank Nifty vs Nifty implications, or how DIIs are countering FII flows.
