FIIs And DIIs Invest $9.6 Billion In Indian Stock Market In May 2025; Telecom And Services Lead Inflows

Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) were net buyers in the Indian equity market in May 2025, signaling continued confidence in India's economic growth. FIIs invested approximately Rs 14,110 crore (USD 1.7 billion), while DIIs made significantly larger purchases worth around Rs 65,570 crore (USD 7.9 billion), making May a strong month for institutional inflows, according JM Financial report.

However, the investment trend shows a clear difference with selective sectors attracting heavy investment while others faced sharp selling.

Top Buyers: Telecom And Services Lead The Way:

The Telecom sector was the biggest beneficiary, attracting $946 million in foreign investment in the month of May. This was followed by Capital Goods, which brought in $623 million, showing growing confidence in India's industrial and infrastructure space. The Banking, Financial Services, and Insurance (BFSI) sector also performed well, with inflows of $470 million, followed by Oil & Gas with $295 million.

These sectors have been seeing steady investor interest due to favorable business outlooks, government initiatives, and improving financial performance.

Pharma, IT, And Power Saw The Largest FII Outflows:

Despite the overall positive trend, some sectors witnessed outflows. The Pharma sector recorded the largest pullback, with $306 million in net outflows.

The Power sector followed closely with $292 million, and the Information Technology (IT) sector saw $285 million in outflows. Other sectors with notable outflows included Consumer Durables ($203 million), Real Estate ($194 million), and Services ($58 million).

These outflows suggest that investors may be rotating funds out of defensive or underperforming sectors into more promising areas like telecom, capital goods, and BFSI.

FIIs Became Cautious in Mid-May:

According to JM Financial, May 2025 was marked by a split trend among foreign investors. For the first half of the month, until May 19, FIIs were aggressive buyers, investing close to $3 billion. However, in the second half of the month, they turned cautious and sold around $1.9 billion worth of Indian stocks. Despite this late-month selling, May still ended with net positive inflows of $1.7 billion from FIIs.

This marked the third straight month of FII inflows, following similar buying patterns in March and April. The consistent interest from global investors reflects improving sentiment toward India's economy and markets.

Nifty Posts Modest Gains:

The benchmark Nifty index rose 1.7% in May, following a 3.5% gain in April. The market gains were backed by strong institutional buying and robust earnings reports across several sectors. While gains were more moderate in May, the overall trend remains positive.

FII Portfolio Mix: BFSI Leads The Chart:

Foreign investors continue to favor five key sectors in India: BFSI, IT, Oil & Gas, Auto, and Pharma. Together, these sectors account for 60% of total FII assets in Indian equities.

As a percentage of FII assets under custody (AUC) in India, BFSI continued to hold the largest share at 31.7%, slightly down from 31.9% in April 2025. FIIs stayed net buyers in BFSI stocks, although the buying amount was lower compared to April.

IT services, the second-largest sector in FII holdings at 8.2%, also remained flat. Interestingly, while FIIs continued to be net sellers in IT services during May, the amount of selling dropped significantly compared to the previous month, signaling a possible slowdown in sector rotation away from tech, noted JM Financial.

The automobile sector saw a slight increase in FII holdings, indicating a possible revival of investor interest. In contrast, Oil & Gas and Pharma sectors experienced small declines in FII holdings during the same period.