Foreign Portfolio Investors or FPIs are back on Dalal Street! FPIs turned buyers of financial stocks in the second half of June, purchasing shares worth Rs 14,634 crore after selling Rs 11,263 crore during the first half of the month. The reversal was driven by inflows related to the rebalancing of global equity indices as well as value buying. It marked the largest fortnightly investment by foreign investors in the financial sector in 2026 and their first net buying in the segment since the second half of February.The renewed interest in financial stocks helped overseas investors emerge as net buyers of Indian equities worth more than Rs 14,000 crore during the June 16-30 period, reversing net outflows of Rs 63,450 crore recorded in the first fortnight of the month, according to NSDL data.“FIIs became net buyers in banking and financial stocks after recording three straight months of heavy outflows. A part of these inflows was driven by the FTSE June 2026 review, while the remainder reflected active buying,” said Sriram Velayudhan, Senior Vice-President at IIFL Capital Services, in a note.Financial stocks have witnessed the largest foreign outflows over the past year because of their significant weight in India’s equity markets, making them particularly vulnerable whenever overseas investors adopted a risk-off stance towards India. As signs of a de-escalation in the West Asia conflict emerged in the middle of June, selling by foreign investors eased, with fresh inflows returning to selected sectors, particularly banks and financial services.“The financial services sector accounts for nearly 40% of the benchmark index, so it naturally attracts significant investment flows. It is a large, liquid sector with strong growth prospects and, in our view, remains undervalued,” said Vikas Gupta, CEO of OmniScience Capital. “Financial services are likely to continue being the preferred sector for long-term investors, including foreign portfolio investors,” he was quoted as saying by ET.Gupta added that financial services and infrastructure remain the firm’s preferred sectors because both offer strong visibility on growth over the near to medium term while continuing to trade below their intrinsic value.Besides financials, foreign portfolio investors remained net buyers in sectors such as construction, consumer services, services, consumer durables, real estate and healthcare, with net purchases ranging from Rs 1,400 crore to Rs 3,400 crore.In contrast, FPIs remained net sellers in automobile and auto components, capital goods, oil, gas and consumable fuels, power, and metals and mining, offloading shares worth between Rs 1,300 crore and Rs 4,300 crore across these sectors. They also continued to reduce their exposure to information technology stocks, although the pace of selling slowed during the second half of June.
