FII flows finally turned positive. Here's why I'm skeptical.

Last week, FIIs reversed a 5-month selling streak. Net buying of ₹3,847 Cr. Indian media reported it as "FII confidence returning." Look deeper at the composition. 78% of the buying was in: • Financial services • IT services • Auto Notice what's missing: small caps, consumer discretionary, infrastructure. This isn't conviction buying. This is index-rebalancing buying. When fund managers face redemption pressure, they sell what they hold. When they get inflows, they buy the index — which means heavy weights in the above three sectors. The selling that came before this was conviction selling: portfolio managers cutting exposure to India broadly. The current buying is mechanical: cash deployment into liquid large caps. Real conviction return requires breadth. When FIIs start buying mid-caps and small caps, that's the signal. Until then, treat this as noise. Look at flows by sector, not just the headline number. That's institutional discipline.