FIIs invest ₹72,800 crore in IPOs over the past 12 months despite ₹4.53 lakh crore equity sell-off

Foreign institutional investors (FIIs) may have remained persistent sellers in India's stock market over the past year, but their appetite for the country's primary market has remained intact. Over the last 12 months, FIIs infused ₹72,800 crore into the primary market while withdrawing ₹4.53 lakh crore from the secondary market, according to the latest report by JM Financial.

The sharp divergence comes at a time when India's secondary market has faced multiple headwinds, with benchmark indices Sensex and Nifty50 declining over 6% and 4%, respectively, in the past one year. The sell-off has been driven by sustained foreign outflows, slowing corporate earnings, elevated valuations and global geopolitical uncertainties.

Yet, the IPO market has continued to attract investor interest, supported by the availability of high-quality businesses across sectors and the opportunity to invest in companies at an early stage of their listed journey.

According to exchange data, as many as 114 companies collectively raised ₹1.71 lakh crore through initial public offerings (IPOs) over the past one year, making India one of the busiest primary markets globally. Of the total, 84 companies mobilised about ₹1.48 lakh crore during the second half of CY2025, while 27 companies raised ₹22,572 crore in the first half of CY2026.

"Over the last 12 months, Indian primary markets raked in FII net inflows of ₹72,800 crore ($8.1 billion), while secondary markets witnessed FII net outflows of ₹4.53 lakh crore ($49.3 billion)," the report said.

Monthly FII flow trends further underscore the shift in investment preference. In June 2026, foreign investors remained net sellers for the fourth consecutive month, pulling out ₹29,170 crore from Indian equities. While FIIs invested ₹6,000 crore in the primary market during the month, they withdrew ₹35,170 crore from the secondary market, resulting in overall net outflows.

The report noted that the benchmark Nifty50 rose 1.4% month-on-month in June after declining 1.9% in May, indicating resilience despite continued foreign selling.

O&G, Auto, Metals, IT among biggest FII casualties

The selling by FIIs was broad-based across sectors. Oil & Gas witnessed the largest foreign outflows during June at $1.40 billion, followed by Auto ($1.10 billion), Metals ($961 million) and IT ($788 million). Other sectors witnessing sizeable outflows included Power ($668 million), FMCG ($585 million), Capital Goods ($425 million), Pharma ($323 million) and Chemicals ($136 million), according to the report.

On the other hand, a few sectors managed to attract fresh foreign capital. BFSI emerged as the biggest beneficiary with net inflows of $357 million during June, followed by Consumer Durables ($204 million), Services ($130 million) and Realty ($85 million). Notably, these sectors reversed from net selling in May to net buying in June, reflecting improving investor confidence in domestic demand-driven businesses.

Even after the recent portfolio reshuffling, BFSI, Capital Goods, Pharma, Auto and Oil & Gas continue to account for nearly 60% of total FII assets under custody (AUC) in India.

"These five sectors account for around 60% of FII assets in India. FII shareholding increased sequentially in BFSI and Pharma, while it declined in Capital Goods, Auto and Oil & Gas," the report highlighted.

BFSI remained the largest sector in foreign institutional portfolios, accounting for 30.8% of FII assets under custody in June, followed by Capital Goods (7.5%), Pharma (7.4%), Auto (7.3%) and Oil & Gas (6.8%).

Domestic institutions emerge as market stabilisers

Domestic institutional investors (DIIs) continued to offset foreign selling. In June alone, DIIs invested ₹85,800 crore into Indian equities, once again emerging as the key counterbalance to overseas outflows and providing stability to domestic markets.

The report also highlighted a structural shift in market ownership. FII ownership of Indian equities has steadily declined to 14.2% in June 2026 from 20% in June 2016, while domestic institutional investors have steadily increased their share to 18.7%.

Since December 2024, DIIs have held a larger share of Indian equities than FIIs, underscoring the growing role of domestic savings in supporting Indian markets amid persistent foreign outflows.

Meanwhile, India's weight in the MSCI Emerging Markets Index increased marginally to 11.1% in June 2026 from 10.9% in May, although it remained well below 18.1% a year ago.

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