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Focus on oversold sectors from FIIs

ICICIdirect Research 09 Jan 2026 DISCLAIMER

Rotation into Defensives and Recovery play
In calendar year 2025, Foreign Institutional Investors (FIIs) were aggressive net sellers in the Indian market, pulling out a record ₹1.66 lakh crore from equities.  While they have sold ~2.45L Crores in the secondary markets, inflows of ~75k crores was seen in primary markets.
The heavy-weight Financial Services sector, despite its approximate 33% weight in the Nifty index, was relatively spared, confirming that FIIs "under-sold" this segment relative to overall market. Despite the significant volatility, the sector saw sell-off of just 14k crores in the secondary markets.  Telecom was the major outlier in 2025, attracting significant inflows of ₹48k crore. 
On the other hand, FIIs disproportionately over-sold Technology, Power, and FMCG sectors. Technology space was the most sold sector, accounting for a nearly ₹75k crore in outflows(~ 45% of all FII selling in 2025). Even FMCG and Consumption space saw noteworthy selling during the last year.
Recent data points towards some change of stance and Investors seems to be "bottom-fishing" the over-sold sectors like Technology, Power and Consumption. The significant sell-off among these sectors seems to be overdone and with AI related cool-off should benefit Indian Technology companies. Similarly, domestic factors should help in revival among Consumption and Power sectors.

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