FPI Exodus: Financials, FMCG, Auto sectors lead outflows in February; Telecom, IT shares buck the development

Overseas Portfolio Buyers (FPIs) continued their promoting spree for the third straight month in February 2025, withdrawing a complete of ₹34,574 crore from the Indian inventory market, based on information from the Nationwide Securities Depository Restricted (NSDL). Whereas the primary half of the month noticed an outflow of ₹21,272 crore, the promoting stress eased barely within the second half, with web outflows amounting to ₹13,302 crore.

Within the first 4 buying and selling classes of March, FPIs have offloaded Indian equities to the tune of ₹22,114 crore, NSDL information confirmed.

“Elevated valuations of Indian equities, alongside issues about company earnings development, have led to a sustained outflow of FPIs. The earnings reviews for the third quarter of fiscal yr 2025 have been modest, indicating an environment of uncertainty. Revisions to ahead earnings have struggled, with downgrades outpacing upgrades, significantly amongst corporations outdoors the Nifty 50 index,” stated Vipul Bhowar, Senior Director – Listed Investments, Waterfield Advisors.

Sectoral Developments: Broad-Primarily based Promoting Continues

The information reveals that FPIs had been web sellers throughout most sectors, with monetary providers experiencing the best outflows in February. FPIs offloaded monetary providers shares price ₹6,991 crore, adopted intently by the fast-moving shopper items (FMCG) sector, which noticed web outflows of ₹6,904 crore.

Vital promoting was additionally noticed within the capital items sector, with FPIs withdrawing ₹4,464 crore, whereas the car & auto elements sector recorded outflows of ₹3,969 crore. The development supplies and oil, gasoline & consumable fuels sectors witnessed FPI outflows of ₹3,844 crore and ₹3,377 crore, respectively, based on NSDL information.

Moreover, the facility sector noticed web promoting of ₹3,086 crore, whereas the patron providers and shopper durables sectors recorded outflows of ₹2,857 crore and ₹2,290 crore, respectively.

Notably, the healthcare sector, which attracted ₹1,534 crore within the first half of the month, changed into a web loser by the tip of February, with FPIs pulling out ₹2,996 crore within the latter half, resulting in a complete outflow of ₹1,462 crore.

“An necessary paradox in FII promoting is that they’re promoting closely in monetary providers – the sector which is doing properly and the valuations are enticing. FIIs are targeted on promoting in India as a result of valuations in India are excessive and transferring cash to Chinese language shares the place valuations are a lot decrease. However within the course of, they’re promoting in the perfect performing sector with enticing valuations,” stated Dr. V Ok Vijayakumar, Chief Funding Strategist, Geojit Monetary Providers.

Selective Shopping for in Telecom, IT

Amid the broad-based promoting, the telecommunications sector stood out as the largest beneficiary, with FPIs investing a web ₹7,998 crore throughout February. Info know-how (IT) shares additionally noticed a web influx of ₹805 crore, indicating some selective shopping for curiosity.

Different sectors that noticed marginal inflows included chemical compounds ( ₹429 crore), media & leisure ( ₹22 crore), and textiles ( ₹33 crore).

Inventory Market Outlook

Based on V Ok Vijayakumar, when FIIs come again to India they’re doubtless to purchase the identical banking shares that they’re promoting now. He famous that FIIs are placing cash in India via the ‘major market and others’ class the place valuations are average. In 2024 FIIs invested ₹1,21,637 crore via the ‘major market and others’ class.

“The newest GDP figures point out that financial development is rebounding in India. If company earnings observe go well with the market will rebound and FIIs are prone to flip patrons. This can occur when main indicators recommend a flip round in company earnings,” Vijayakumar stated.

Disclaimer: The views and proposals made above are these of particular person analysts or broking corporations, and never of Mint. We advise traders to verify with licensed consultants earlier than making any funding selections.