FPIs sell heavily into banks, FMCG, Capital Goods in Feb-25

6 Mar 2025 , 10:58 AM

FPIS NET SELL $(3.97) BILLION IN FEB-25; $13 BILLION YTD

FPI selling in February 2025 may not have been as intense as January 2025, but at $3.97 Billion, it is bad enough. More importantly, Indian equities have seen FPI outflows of $13 Billion in 2025. FPI selling was to the tune of $(2,446) Million in the first half of Feb-25 and $(1,520) Million in the second half of February 2025. Unfortunately, the IPO market virtually dried up, and that could not offer any respite from secondary market selling.

Domestic data flows were relatively stable in February 2025. The month began with a consumer friendly Union Budget, and a monetary policy that cut rates by 25 basis points. While CPI inflation has been subdued, it still remains above the 4% RBI target. GDP growth for Q3 was tepid at 6.2%, but the MOSPI estimates that India could end FY25 with 6.5% real GDP growth, which pre-supposes 7.5% in Q4. Core sector growth was also robust at 4.6%.

Let us turn to the macro picture of flows across equity and debt for February 2025. For the month, FPIs were net sellers in secondary market equities worth ₹(41,749) Crore, but infused ₹7,175 Crore into IPOs; making them net sellers in equities of ₹(34,574) Crore. However, debt saw net FPI inflows of ₹10,274 Crore in February 2025; resulting in overall  FPI outflows of ₹(24,301) Crore.

FPI AUC ENDS SHARPLY LOWER IN JANUARY 2025

Assets under custody (AUC) is a function of FPI flows and price accretion or depletion (as the case may be). Between December 2024 and January 2025, FPI AUC fell from $831 Billion to $782 Billion; and in February 2025, FPI AUC fell further to $714 Billion. Since the peak of September 2024, the FPI AUC has fallen rom $931 Billion to $714 Billion as of Feb-25.

Industry Group	FPI AUC (Feb 2025) ($ Billion)	FPI AUC (Jan 2025) ($ Billion)
Financials (BFSI)	220.05	226.96
Information Technology (IT) Services	70.42	80.64
Oil & Gas	49.98	54.44
Automobiles and Auto Components	49.79	57.08
Healthcare and Pharmaceuticals	48.64	53.91
Fast Moving Consumer Goods (FMCG)	39.61	45.63
Capital Goods	32.60	39.90
Telecommunications	31.16	32.12
Consumer Services	30.60	33.60
Power (generation and transmission)	24.38	28.31
Metals and Mining	20.63	21.50
Consumer Durables	20.48	22.76
Realty	14.60	17.09
Services	14.44	15.09
Construction	12.63	15.21
Chemicals	12.22	13.32
Cement	11.68	13.41
Top 17 Sectors	703.91	770.96
Other 6 sectors	9.87	11.15
Total FPI AUC	713.78	782.11

Data Source: NSDL

The table above captures the top 17 sectors where the FPI AUC is more than $10 Billion as of the close of February 2025. Out of the 23 sectors as identified by NSDL, the AUC of the top-17 sectors accounted for 98.6% of total FPI AUC of $713.78 Billion. Between January 2025 and February 2025, the FPI AUC is down -8.7%, while calculated from peak of September 2024, the FPI AUC is down sharply by 23.3%.

What about the key components of AUC as of February 2025. At $220.05 Billion, BFSI continues to dominate the AUC stakes; while IT, Oil, Automobiles, and healthcare are the other key sectors where FPIs are exposed to. In terms of MOM change in AUC in February 2025, there was value depletion across sectors, with telecom and chemicals managing to perform better, even in the midst of the carnage in stock markets.

FPI BUYING DOMINATED BY TELECOM; BUT LITTLE ELSE

In February 2025, FPIs were net sellers of $(3.97) Billion in Indian equities; with FPI selling of $(2.45) Billion in the first half of the month and $(1.52) Billion in the second half. There were just 4 sectors seeing buying in February 2025.

FPI Net Buying in Sectors	H1-Feb-25 ($ Million)	H2- Feb-25 ($ Million)	Feb-25 ($ Million)
Telecom	+269	+648	+917
Others	-13	+153	+143
Information Technology (IT)	+80	+13	+93
Chemicals	+39	+11	+50

Data Source: NSDL

In a month, when IPO flows were tepid, and FPIs were net sellers of $(3.97) Billion, it is obvious there were not too many sectors seeing positive flows. The above table says it all.

BUT, FPI SELLING WAS RATHER HEAVY IN FEB-25

Here is a sectoral break-up of FPI net outflows from Indian equities in February 2025.

FPI Net Selling in Sectors	H1-Feb-25 ($ Million)	H2-Feb-25 ($ Million)	Feb-25 ($ Million)
Banking & Financial Services (BFSI)	-615	-188	-803
Fast Moving Consumer Goods (FMCG)	-499	-294	-793
Capital Goods	-369	-144	-513
Automobiles & Auto Components	-79	-375	-454
Cement	-233	-208	-441
Oil & Gas	-280	-108	-388
Construction	-217	-168	-385
Power	-213	-141	-354
Consumer Services	-260	-68	-328

Data Source: NSDL

FPI selling was once again led by BFSI, but there were a total of 5 sectors that saw more than $400 Million selling in February 2025, with 9 sectors seeing sell-off of over $300 Million. The selling has been quit intense, especially in sectors like BFSI, FMCG, capital goods etc, where the FPIs are trying to come to terms with the changing global macro equations.

OUTLOOK FOR FPI FLOWS IN COMING MONTHS

With the Budget 2025-26 and the February 2025 monetary policy out of the way, the other major data points are the current account deficit (CAD) for Q3, upcoming Fed meeting in March 2025 and the April 2025 RBI monetary policy. However, the big overhang for markets is what would be the outcome of all the penal tariffs that the US government seems to be keen to squeeze out of its trading partners. Combined with the fallout between the US and Ukraine last week, it is going to be an uncertain period for FPI flows.