Mutual funds, FIIs poured capital into telecom, financials, services in May as block trades soared

Telecom, financial, and services sectors attracted substantial institutional interest last month, with strong inflows from both mutual funds and foreign investors, underscoring a month of heavy institutional activity of over Rs 78,500 crore in total during May – highest since the September last year, as block deal activities surged.

According to ACE Equities, mutual funds invested over Rs 5,730 crore in telecom stocks, while NSDL data shows that FIIs contributed more than Rs 8,089 crore into the sector. Financial services attracted the largest share of mutual funds inflow at Rs 17,370 crore while FIIs added Rs 4,028 crore.

The services sector also witnessed considerable activity, with MFs investing Rs 4,061 crore and FIIs infusing Rs 7,972 crore. FMCG stocks received Rs 10,213 crore from mutual funds, whereas FIIs showed limited interest, contributing only Rs 815 crore.

A contrasting trend was observed in healthcare, which saw an outflow of Rs 2,614 crore from FIIs, even as MFs remained net buyers with investments of Rs 3,029 crore. In the utilities space, mutual funds allocated Rs 2,163 crore, while FIIs made marginal purchases worth Rs 23 crore, as per combined data from ACE Equities and NSDL.

Overall, institutional inflow into Indian equities surpassed Rs 78,500 crore in May – highest monthly tally in the last eight months. FIIs infused over Rs 21,445 crore, while domestic institutional investors – including mutual funds – contributed more than Rs 57,000 crore. This marked their most aggressive buying since September 2024.

Benchmark indices mirrored the bullish sentiment as the Sensex rose 1.73 percent and the Nifty 50 gained 2.05 percent last month. The broader markets significantly outperformed, as the BSE Midcap index surged 5.6 percent and the BSE Smallcap index soared 10.4 percent.

Analysts attributed this sharp uptick in institutional activity to a surge in block deals, bulk transactions, and promoter-led offers for sale – factors that have improved liquidity and created attractive entry points for investors. Promoters capitalised on the recent rally, executing deals worth over Rs 50,000 crore in May alone, the highest monthly total since August 2024, when such activity had touched Rs 75,000 crore.

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