FPIs favor IT, Realty, Financials in December; Oil & Gas faces heavy selling

Foreign Portfolio Investors (FPIs) emerged as net buyers in the Indian stock market during December 2024, following two consecutive months of heavy selling. FPIs made net equity purchases worth ₹15,447 crore in December, driven by investments in Information Technology (IT), financial services, and realty stocks.

According to data from the National Securities Depository Ltd (NSDL), total FPI inflows into the Indian market across asset classes — including debt, hybrid instruments, debt-VRR, and equities — amounted to ₹25,938 crore in December.

For the full year 2024, FPIs invested ₹427 crore in Indian equities. When considering all asset classes, total FPI inflows reached ₹1.65 lakh crore. The Indian debt market also witnessed a net FPI inflow of ₹13,000 crore during the year.

It is worth noting that while Foreign Institutional Investors (FIIs) have been net sellers in the cash market through exchanges, they have maintained a significant presence as buyers in the primary market, particularly through the Qualified Institutional Placement (QIP) route.

“For December, FIIs sold equity for ₹2,590 through the exchanges; but they bought equity for ₹18,036 crores through the ‘primary market and others’ category. For CY 2024 this trend is very distinct. For CY 24 FIIs sold equity heavily for ₹1,21,210 crore. But they bought equity for ₹1,21,637 crores through the primary market. Therefore, FIIs have net bought for ₹427 crore in 2024. The message is clear: FII selling is due to high valuations in the secondary market. In the primary market where the valuations are fair, FIIs have been sustained investors,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

He believes FIIs are likely to continue to sell going forward, so long as the dollar continues to rally and the US bonds yield attractive returns.

Meanwhile, in December, FPI investments were concentrated in sectors such as IT, financial services, realty, and consumer services. However, the oil and gas sector experienced the largest FPI outflows during the month.

Below is an overview of the sectors that saw the highest FPI inflows and outflows in December 2024:

Sectors FPIs bought the most

IT sector was the biggest beneficiary of FPI inflows in December as overseas investors bought sector shares worth ₹9,050 crore. This was followed by Realty sector with FPI investments worth ₹4,778 crore and Healthcare sector with ₹3,767 crore inflows, NSDL data showed.

FPI inflows in Consumer Services were at ₹3,220 crore, Capital Goods at ₹3,128 crore and Financial Services at ₹3,086 crore.

The construction sector attracted FPI inflows worth ₹1,408 crore, while Services and Textiles witnessed inflows to the tune of ₹1,764 crore and ₹889 crore, respectively. Metals & Mining sector received ₹971 crore inflows, while the Telecommunication sector saw inflows amounting to ₹372 crore.

Sectors FPIs sold the most

The Oil, Gas, and Consumable Fuels sector experienced the highest FPI outflows in December 2024, with net selling amounting to ₹10,826 crore, according to data from the NSDL.

This was followed by the Automobile and Auto Components sector, which saw FPI outflows of ₹4,371 crore, and the Fast-Moving Consumer Goods (FMCG) sector, which recorded net selling worth ₹2,789 crore.

Other sectors also faced significant FPI selling during the month. The Power sector witnessed outflows of ₹1,862 crore, while the Consumer Durables sector and Construction Materials sector recorded net FPI selling of ₹900 crore and ₹370 crore, respectively.

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