Month: August 2025

July Snapshot: FPIs Dump Equities Aggressively in Second Half; DIIs and MFs Provide Strong Support

July’s Sectoral Sell-Off: FPIs Slash Positions in IT & Financials

• Tech & Financials Bear the Brunt: FPIs executed an aggressive sell-off in Information Technology, dumping ₹19,901 Cr—with a sharp ₹14,422 Cr outflow in the second half alone. Financial Services also witnessed heavy selling, with ₹5,900 Cr of net outflows, reflecting risk aversion amid global headwinds and profit booking.
• Cyclical Sectors Under Pressure: Selling extended to Realty (₹3,933 Cr), Automobile & Auto Components (₹3,584 Cr), Oil & Gas (₹3,272 Cr), and Consumer Durables (₹2,614 Cr). Even Construction and Media saw steady exits, indicating a broad-based pullback from cyclical and rate-sensitive sectors in the face of macro uncertainties.

FPIs Bet on Domestic Demand and Defensive Plays in July

• Services, Consumption & Mining Lead Buys: Despite net equity outflows in July, FPIs selectively bought into domestic-facing sectors. Services (₹3,457 Cr), Metals & Mining (₹3,365 Cr) and Consumer Services (₹3,017 Cr) topped the buy list, reflecting a tilt toward consumption-led growth and earnings visibility. FMCG staged a sharp rebound, reversing a ₹1,428 Cr sell-off in the first half with a ₹2,986 Cr buy-in later, ending the month with ₹1,558 Cr inflows.
• Broader Defensive Buying Continues, But Capital Goods Wobbles: FPIs also favored Telecom (₹1,473 Cr), Chemicals (₹1,129 Cr) and Construction Materials (₹329 Cr). However, Capital Goods witnessed a shift in sentiment—turning from ₹922 Cr buying in the first half to ₹617 Cr selling in the second, ending with a tepid ₹305 Cr net inflow.

For a comprehensive understanding and more insights, please go through our detailed report.

July witnessed consolidation in the debt market following June’s repricing, with yields largely range-bound across the curve. Crude oil prices remained volatile but ended higher on supply concerns and geopolitical developments. Liquidity in the banking system stayed in surplus, though the RBI actively managed it through frequent VRRR operations. Meanwhile, the rupee weakened sharply amid renewed trade tensions and heavy FPI outflows, underperforming most regional peers despite a mid-month softening in the dollar index.

Money Market and Low Duration Funds continued to lead the sub-1-year space in July, delivering healthy 3-month annualised returns of 7.36%, supported by elevated short-term rates and stable accrual. Corporate Bond and Credit Risk Funds stood out in the short- to medium-term horizon, benefiting from spread compression and strong demand for high-quality credit.

The Indian rupee depreciated sharply, ending July near record lows due to renewed trade tensions, persistent FPI outflows, and a strengthening dollar. Despite RBI intervention, the rupee underperformed regional peers and remains on a cautious footing.

The attached snapshot captures all these key developments, along with category-wise mutual fund performance trends.

Click below to read the full snapshot attached.