BFSI, Oil, Autos, and IT lead FPI selling thrust in first half of June 2026

FPI SECTORAL SELLING BROAD-BASED IN JUNE

FPI selling in June 2026 was more intense than March and April, and also more broad-based. The first fortnight of June saw FPI selling in equities to the tune of $6.70 billion, one of the biggest sell-offs in recent memory. In June, FPI selling was spread across BFSI, oil & gas, automobiles, and IT. With the RBI making debt attractive and tax-efficient for FPIs, there has also been a shift by FPIs from equity to Indian debt. FPI equity AUC (assets under custody) bounced to $719 billion as of June 2026, while overall AUC of equity and debt bounced to $795 billion; still sharply lower than September 2024 peaks.

Data Source: NSDL

FPI TRIGGERS: WHY WAS SELLING SO HEAVY IN JUNE-H1?

• While there is a peace deal in place, markets apprehend that delicate issues like sanctions, nuclear enrichment, and defreezing funds are yet to be addressed.

• While the Straits of Hormuz may be opened soon, there are concerns that it will take time for insurance costs to come down and shippers willing to take the risk

• There are concerns that, even after the war, supply of oil & gas from the Middle East may take several months to get back to normal; keeping markets undersupplied.

• While global central bank hawkishness remains a risk, India also runs the risk that the heavy inflow of FPIs into debt may be funded by monetizing equity positions.

SECTORAL FPI FLOWS IN JUNE 2026 (FIRST FORTNIGHT)

FPIs were net sellers of $6.70 billion in H1-June 2026, which is evident from the fact that 19 out of the 23 sectors listed by NSDL saw net FPI selling in the first fortnight.

• Let us start with the BFSI sector that saw net selling of $1.19 billion in first fortnight of June 2026. Again, it was the low-hanging fruit for FPIs looking for sector churn.

• Oil & gas and automobiles saw combined selling of $2.06 billion; as they are the two sectors which have been really hit by the supply chain disruptions caused by the war.

• The two export oriented sectors of IT and Healthcare saw combined selling of $1.19 billion amidst expectations of global slowdown in IT spending and price pressures.

• The favourites of recent months; capital goods, metals, and power also saw combined net selling $1.04 billion as investment cycles are expected to slow.

• FMCG and Consumer Services saw combined net selling of $731 million as higher inflation fears is likely to impel consumers to go slow on consumption spending.

• Who were the gainers? Telecom, services, and miscellaneous sectors saw some buying. However, this buying was too small to make any meaningful difference.

For the FPIs, the key factors continue to be two-fold. Firstly, how soon will the situation in the Middle East normalize and when will ships pass through the Strait in full strength. Secondly, what could be growth implications of central bank hawkishness?