FII Sectorial Flows India: June 2023 Update

India has experienced a consistent influx of positive FII flows over the past four months, and it appears that this trend is continuing into the current month as well. These FII flows have demonstrated a positive correlation with the index returns, resulting in significant gains for the index over the same four-month period.

While FII flows are generally viewed as positive, it is important to note that these flows do not impact every sector equally. For instance, the IT sector has remained out of favor and experienced negative flows in June, whereas sectors like financials have witnessed substantial inflows. Understanding which sectors receive these flows can provide an added advantage.

Adopting a strategy of piggybacking on FII flows can be highly profitable. This is because institutions typically invest in companies for longer holding periods. Therefore, while there may be a possibility of missing out on initial gains, there is still potential for significant returns over a one-year period.