Flexicap funds pull ₹1,886 crore from international equities: Is domestic investing back in favour?

Leading flexicap mutual funds appear to be recalibrating their investment strategies, reducing exposure to international equities while increasing allocations to domestic sectors such as telecom, real estate and automobiles.

According to Sebi data, the top 28 flexicap funds recorded net outflows of ₹1,886 crore from international equities between September and October 2026, making it the sector with the highest net reduction in exposure.

The shift comes amid contrasting investment decisions in global technology stocks, suggesting that fund managers are becoming increasingly selective about overseas investments rather than abandoning international diversification altogether.

Microsoft, Meta see significant reductions

Among the biggest changes was Microsoft Corporation, where reported exposure declined by ₹1,532 crore. Infosys followed with a reduction of ₹598 crore, although it is classified as a domestic IT company.

Meta Platforms witnessed complete exits worth ₹4,107 crore, with the data attributing the transaction to PPFAS.

Nvidia Corporation also featured among the complete exits, with exposure worth ₹270 crore eliminated.

However, the selling was not uniform across international equities.

Netflix emerged as the largest fresh purchase, attracting ₹4,494 crore from PPFAS. This contrasting positioning indicates that fund managers may be reassessing individual companies based on valuations, earnings prospects and portfolio concentration.

The reported figures reflect changes in portfolio exposure by value and should not necessarily be interpreted as equivalent cash flows.

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Domestic sectors attract significant capital

While international equities recorded the largest sectoral outflow, domestic-oriented sectors witnessed substantial increases in exposure.

Telecom services topped the list with net inflows of ₹2,038 crore, followed by realty at ₹1,169 crore and automobiles at ₹923 crore.

DLF recorded the highest increase in individual stock exposure at ₹1,290 crore, followed by Bharti Airtel at ₹919 crore and Mahindra & Mahindra at ₹591 crore.

Eternal and Max Healthcare Institute also attracted increased exposure worth ₹569 crore and ₹532 crore, respectively.

These allocations suggest growing interest in businesses linked to domestic consumption, infrastructure development and services demand.

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Is domestic investing becoming more attractive?

Several considerations could influence such portfolio decisions, including overseas equity valuations, currency fluctuations, domestic corporate earnings expectations and diversification requirements.

A weaker rupee can increase the rupee value of overseas holdings, while global market volatility can affect their attractiveness. However, the FinAlpha data does not establish whether these factors directly influenced October's transactions.

For investors, the developments highlight the importance of distinguishing short-term portfolio adjustments from long-term investment strategies. International equities can still provide geographical diversification and exposure to businesses unavailable in Indian markets.

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