Institutional investors tilt to financials; capex sectors in focus: Antique

Institutional investors are shifting away from consumer-facing sectors toward financials, given their attractive valuations, under-ownership, and improving fundamentals as the rate cut cycle nears its end, Antique Stock Broking said in its latest report. 

Antique’s analysis showed mutual funds have steadily increased overweight exposure to financial services over the past year, with OW positioning rising 1.1 per cent in one month, 1.5 per cent over three months, and 2 per cent over six months. 

"We believe that investor preference may also turn favourable towards investment-linked sectors given under ownership, early signs of private capex revival, and improving macro environment (given the impending India-US interim trade agreement)," said Pankaj Chhaochharia and Dhirendra Tiwari.

MFs, FPIs stay negative on investment-linked sectors

According to Antique, both mutual funds (MFs) and foreign portfolio investors (FPIs) remain negative on investment-linked sectors, including healthcare, even as FPIs have trimmed their underweight stance on capital goods in recent months. While both MFs and FPIs’ overweight or least underweight positions in consumer discretionary sectors, such as autos and consumer durables, and their negative stance on financials have moderated over the past few months, caution persists amid evolving market conditions.

MFs buy domestic sectors, FPIs focus on metals

In January 2026, mutual funds increased their exposure to domestic sectors such as services, cement, real estate, consumer services, financial services, and power & utilities. They reduced allocations to global-linked sectors like metals & mining, IT services, oil & gas, as well as telecom and capital goods, the brokerage said in its note. 

On the contrary, FPIs sold heavily in real estate, FMCG, consumer services, and healthcare, while showing net buying in metals & mining and capital goods.  

FPIs recorded cumulative selling of nearly ₹3.9 trillion in FMCG, alongside continued outflows from real estate and healthcare, while selectively adding exposure to metals & mining and capital goods.

FPI flows may boost under-owned sectors in 2026

"FPI equity flow to India has turned positive in February (so far), following a steady sell-off since September 2024 as India is in the process of signing an interim trade agreement with the USA," Antique said. 

Analysts expect FPI inflows to remain healthy throughout 2026, supported by improving macroeconomic conditions and structural opportunities in Indian equities.  

The brokerage noted Indian equities are currently trading at an average premium relative to other emerging and developed markets. Additionally, corporate earnings are expected to recover in FY26-28 on a low base, underpinned by a likely pick-up in nominal GDP growth, further strengthening the investment case. 

Given the low FPI ownership in India, sectors with either high FPI holdings, such as real estate, telecom, services, and financial services, or those that are under-owned or least overweight, including capital goods, financial services, and power utilities since September 2018, could see significant benefits from renewed foreign inflows.