FPI infuse $1.71 Billion into Indian equities in June 2025

FPIS NET BUY $1.71 BILLION IN JUNE 2025

Like May, even June saw positive inflows into equities from FPIs. However, the FPI flow story was dominated largely by IPO flows in the second half. FPIs were actually net sellers in the first half of June, but turned net buyers in the second half of June, thanks to a more stable macro environment and a slew of big-ticket IPOs. In June, if FPIs were net sellers to the tune of $628 Million in the first half; they were net buyers for $2,333 Million in the second half.

June was a month in which several data points favoured FPI flows. Firstly, India moved closer to a trade deal with the US. Secondly, the RBI cut rates by 50 bps and the CRR by 100 bps (in tranches). This ensured a mix of lower rates and ample liquidity. Above all, the current account deficit for FY25 came in sharply lower at 0.6% of GDP, against expectations of well above 1% of GDP. This was thanks to a current account surplus of $13.5 billion in Q4.

FPI AUC CONTINUES TO BE ROBUST IN JUNE 2025

Assets under custody (AUC) combines FPI flows and price moves. Between May 2025 and June 2025, the FPI AUC jumped from $834 Billion to $867 Billion. FPI Equity AUC is still below the peak of $931 Billion in September 2024. Consolidated FPI AUC at $909 Billion is also below September 2024 peak of $1.04 Trillion.

Data Source: NSDL

These are the top 17 sectors where FPI AUC is more than $10 Billion as of the close of June 2025. Out of the 23 sectors identified by NSDL, AUC of top-17 sectors accounted for 98.6% of total FPI AUC of $867.26 Billion. Despite the AUC bounce in the last 3 months, the FPI AUC as of June 2025 is -6.9% below the peak AUC as of September 2024.

What about the key components of AUC as of April 2025. At $264.12 Billion, BFSI continues to dominate the AUC stakes. Among specific sectors, the sectors with highest percentage accretion in AUC over May were; Telecom (8.7%), Consumer Services (8.7%), Cement (8.1%), Chemicals (7.4%), Services (6.7%), Realty (4.7%), Healthcare (4.6%), and Oil & Gas (4.5%).

FINANCIALS, OIL & GAS, AND AUTOS DRIVE FPI BUYING

In June 2025, FPIs were net buyers worth $1.71 Billion. Here is the sector wise break-up of positive FPI flows in June 2025.

Data Source: NSDL

The top 2 sectors in terms of June 2025 flows; Financials and Oil & Gas saw aggressive buying in the first and the second fortnight of June 2025. Telecom buying was again dominated by Bharti Airtel, while there was good deal of AUTO buying in M&M and Tata Motors. Surprisingly, IT and realty were among the positive sectors in June 2025.

POWER AND FMCG BEAR THE SELLING BRUNT IN JUNE

Here is a sectoral break-up of FPI net outflows from Indian equities in May 2025.

Data Source: NSDL

The selling theme for FPIs in June 2025 was spread across capital goods and consumer goods. Despite the domestic story, FMCG and consumer durables saw pressure due to concerns over urban demand. That is expected to have become more pronounced in the June quarter. Power and Capital goods are facing growth constraints, which is hurting.

OUTLOOK FOR FPI FLOWS IN COMING MONTHS

There are 3 things that are likely to be critical for FPI flows in the coming months. Firstly,  the sharply lower interest would reduce the cost of funds and make valuations more attractive. It would even be able to justify the relatively higher comparative P/E ratio of Indian markets. Secondly, the Indo-US trade deal (if it happens) would be a big boost to FPI flows. Thirdly, the focus would now shift to Q1 results for Indian corporates and whether the overall growth momentum can be maintained. Of course, the geopolitical risk continues to be the overhang at a macro level.