FII Flows Turn Positive: June 2026 Sector Map India

Early signs of FII return after a long sell-off

Foreign institutional investors (FIIs) may be showing early signs of coming back to Indian equities after a prolonged phase of selling, according to a Motilal Oswal Financial Services (MOFSL) report. The signal comes from a sharp change in the direction of flows during the second half of June. The report links the shift to improving global conditions and easing geopolitical tensions, which appear to be reducing risk aversion at the margin.

The change matters because foreign flows have had an outsized impact on day-to-day market direction over the past year. Even when domestic liquidity has stayed steady, heavy foreign selling has tended to cap upside in large caps and increase volatility. MOFSL’s data suggests that, at least temporarily, that pressure eased late in the month.

Second half of June flips the flow picture

MOFSL said FII flows turned net positive at $1.3 billion in the second half of June, compared with net outflows of $1.3 billion in the first half. The swing is notable because it came after months of persistent selling pressure and weak risk appetite.

While the report frames it as an early sign of a return, it does not treat one data point as a full reversal. It instead positions the late-June inflow as a potential change in trend that will still depend on how global risk factors evolve. The report’s broader message is that flows can turn quickly once the drivers of foreign risk appetite stabilise.

June still extends the monthly selling streak

Despite the improvement in the second half, June marked the fourth straight month of net FII outflows. Foreign investors sold equities worth $1.2 billion during the month, although the pace of selling moderated compared with earlier months.

MOFSL’s sector breakup shows that the selling was not evenly distributed across the market. Instead, it was concentrated in a few pockets, while some domestic-facing and financial segments still saw net buying.

Sector-wise June flows: where FIIs sold and bought

The report listed the bulk of June selling in four sectors:

• Oil and Gas: $1.4 billion outflows
• Automobiles: $1.1 billion outflows
• Metals: $1.0 billion outflows
• Technology: $1.8 billion outflows

In contrast, FIIs remained net buyers in:

• Financial Services: $1.4 billion inflows
• Services: $1.3 billion inflows
• Consumer Durables: $1.2 billion inflows

The report also flagged two notable inflection points. Capital Goods saw its first monthly outflow in six months, while Consumer Services drew foreign inflows for the first time after five consecutive months of selling. At the same time, FMCG extended its foreign selling streak to 11 consecutive months, while Technology and Telecom each recorded six straight months of outflows.

What the 2026 pattern says about positioning

Beyond June, MOFSL highlighted broader sector patterns for CY26. Among sectors, Financial Services saw the highest outflows at $11.8 billion, followed by Technology at $1.7 billion.

Yet some sectors continued to attract foreign capital on a net basis in CY26:

• Capital Goods: $1.3 billion inflows
• Metals: $1.4 billion inflows
• Services: $1.6 billion inflows

The report added that Technology, FMCG and Telecom witnessed foreign selling in every month of CY26, while Capital Goods, Metals and Services consistently attracted inflows over the same period. This creates an important nuance for investors reading the June sector data: a sector can see monthly selling and still remain a net inflow sector over a longer window.

Market backdrop: geopolitics, crude, and risk appetite

MOFSL’s flow commentary sits inside a broader market context in which geopolitical risk has periodically driven sharp moves. Motilal Oswal’s research commentary described Indian equities as navigating a volatile phase, shaped by persistent FII outflows, resilient domestic institutional investor (DII) inflows, and uncertainty linked to the West Asia conflict.

Gautam Duggad, Director and Head of Research, Institutional Equities at Motilal Oswal Financial Services, said the correction was largely driven by escalation of the Israel/US–Iran conflict, the rise in crude oil prices above $100, and the earnings downgrades that followed. He also said the market was near its highs after a US trade deal announcement in Feb’26, but corrected as global risks intensified. Duggad added that FIIs have withdrawn $10 billion since the start of the West Asia war.

Domestic money remains the stabiliser

Duggad said DII inflows have been net positive for 33 consecutive months, totalling $145 billion since Oct’24, helping provide downside support even when foreign selling intensified. Separately, sector ownership data in the same information set points to a structural shift in Indian equities.

One snapshot showed DII ownership rising to an all-time high of 20% in Sep’25, while FII ownership dipped to an all-time low of 18.3%. Another snapshot (as of Jun’25) showed DII ownership at 19.4%, FII ownership at 18.8%, promoter holdings at an all-time low of 49.3%, and retail holdings at 12.4%. The report linked the promoter holding decline to a recovery in the primary market in 1QFY26, where high valuations and strong demand created opportunities for stake sales.

Stock ideas highlighted for the June 15, 2026 week

Motilal Oswal Wealth Management Research Desk identified Privi Speciality Chemicals and Cummins India as primary stock recommendations for the trading week beginning June 15, 2026. The data provided included current price, target price, and expected upside.

Key numbers at a glance

Why the flow shift matters for investors

The late-June flow reversal is relevant because it can change near-term market leadership. When FIIs reduce selling or turn net buyers, large caps and index-heavy sectors often see quicker sentiment stabilisation, even if domestic flows remain the main support. At the same time, MOFSL’s sector detail shows foreign investors are still selective, with defensives like FMCG and technology seeing extended selling streaks in CY26.

The report’s broader framework suggests that a sustained improvement in FII flows will depend on global valuations, easing geopolitical risks, and how global themes such as the AI trade evolve. For Indian markets, the combination of steady domestic inflows and even a moderation in FII selling can reduce downside volatility, even before a full foreign buying cycle returns.

Conclusion

MOFSL’s data shows FIIs turned net buyers in the second half of June, even though the month still ended as the fourth straight month of net outflows. Sector-level flows show concentrated selling in oil and gas, autos, metals and technology, while financial services and some domestic-facing segments saw buying. With DII flows remaining strong and ownership steadily rising, the next key variables to watch are crude prices, geopolitical developments, and whether foreign flows stay positive beyond a late-month bounce.