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FPI Rebalancing Wave: Position for BFSI & Telecom Upside

ICICIdirect Research 19 Dec 2025 DISCLAIMER

In the current year so far, Foreign Institutional Investors (FIIs) have shown a clear preference for the telecommunications and BFSI sectors, substantial capital into these areas even as they have pulled over ₹1.98 lakh crore out from Indian equity markets. While major outflows were seen from Technology and Consumption space, there has been substantial inflows into the telecommunications sector (~43k Crores). Also, despite such outflows and highest weighted sector in index, allocation in BFSI space remained largely unchanged suggesting clear preference of these sectors for the coming months.

A key factor regarding future flows is the potential listing of Reliance Jio. The telecommunication sector's current index weight of approximately 4.7 is due to Bharti Airtel. With expected initial public offering (IPO) of Reliance Jio, the sector's weight in Nifty 50 could potentially increase toward ~10%, potentially equating current weight of Technology sector and becoming the second-largest sector after BFSI.

In case of fresh flows coming into Indian markets, BFSI space is likely to be major gainer while telecom space should gain by incremental passive flows due to increased weight.

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