FPIs turn net sell $(9.01) Billion in Indian equities in Jan-25

6 Feb 2025 , 11:28 AM

FPIS NET SELL $(9.01) BILLION, WORST SINCE OCTOBER 2024

The FPI selling in Indian equities started aggressively in October 2024 at $11.21 Billion. However, November saw FPI selling subdued at $(2.56) Billion. In fact, December 2024 even saw net FPI buying of $1.83 Billion as some  year-end allocations were seen. However, if markets were expecting fresh FPI allocations in January 2025, they were surely disappointed as FPIs sold Indian equities worth $(9.01) Billion in the first month of 2025. FPI selling was almost even through the month with the first half of January 2025 seeing FPI selling of $(4,123) Million and the second half of the month seeing selling at $(4,889) Million. With the IPO market virtually drying up, it was all about secondary market selling in Indian equities.

Surprisingly, the domestic data flows were relatively stable in January. The inflation stayed flat at 5.22% while the IIP and core sector growth continued to be steady. The December monetary policy had cut CRR by 50 bps and there are strong hopes that the February 2025 monetary policy will see a 25 bps rate cut. However, the real risk for FPI flows came from the global tariff regime. Trump imposed punitive tariffs on Mexico, Canada, and China; raising fears that a Chinese devaluation could force the Indian rupee also lower.

Let us also look at the macro picture of flows across equity and debt for January 2025. For the month, FPIs were net sellers in secondary market equities worth ₹81,904 Crore, but infused ₹3,877 Crore into IPOs; making them net sellers in equities of ₹78,027 Crore. However, debt saw net inflows of ₹816 Crore in January 2025; resulting in overall  FPI outflows in the month at ₹77,211 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. The details are captured sector-wise.

Industry Group	FPI AUC (Jan 2025) ($ Billion)	FPI AUC (Dec 2024) ($ Billion)
Financials (BFSI)	226.96	239.39
Information Technology (IT) Services	80.64	85.16
Automobiles and Auto Components	57.08	58.99
Oil & Gas	54.44	54.89
Healthcare and Pharmaceuticals	53.91	59.30
Fast Moving Consumer Goods (FMCG)	45.63	47.77
Capital Goods	39.90	45.12
Consumer Services	33.60	40.26
Telecommunications	32.12	31.85
Power (generation and transmission)	28.31	30.62
Consumer Durables	22.76	25.55
Metals and Mining	21.50	22.78
Realty	17.09	19.86
Construction	15.21	16.35
Services	15.09	16.69
Cement	13.41	13.74
Chemicals	13.32	13.11
Top 17 Sectors	770.96	821.41
Other 6 sectors	11.15	10.08
Total FPI AUC	782.11	831.49

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 January 2025. Out of the 23 sectors as identified by NSDL, the AUC of the top-17 sectors accounted for 98.57% of total FPI AUC of $782.11 Billion. How sharp has been the fall in AUC since the peak of September 2024. In the last 4 months the equity AUC of FPIs has fallen by -16%, while the overall AUC of equity and debt has fallen by -16.8%.

What about the key components of AUC as of January 2025. At $226.96 Billion, BFSI dominates the AUC stakes; while Healthcare has fallen to fifth position. The other key sectors by AUC were IT, Automobiles, Oil & Gas, FMCG, and Capital Goods. In terms of MOM change in AUC in January 2025, there was value accretion telecom and chemicals; while all the other sectors saw pressure of FPI flows in the month.

FPIS SELLING RAMPANT THROUGH JANUARY 2025

In January 2025, FPIs were net sellers of $(9.01) Billion in Indian equities; with FPI selling of $(4.12) Billion in the first half of the month and $(4.89) Billion in the second half.

FPI Net Buying in Sectors	H1-Jan-25 ($ Million)	H2- Jan-25 ($ Million)	Jan-25 ($ Million)
Others	-16	+156	+140
Textiles	+24	+46	+70
Chemicals	+5	+36	+41

Data Source: NSDL

In a month, when IPO flows were tepid, and FPIs were net sellers of $(9.01) Billion, it is obvious there were not too many sectors seeing positive flows. The above table says it all.

FPIS sell heavily in

Here is a sectoral break-up of FPI net outflows from Indian equities in December 2024.

FPI Net Selling in Sectors	H1-Jan-25 ($ Million)	H2-Jan-25 ($ Million)	Jan-25 ($ Million)
Banking & Financial Services (BFSI)	-1,411	-1,471	-2,882
Consumer Services	-405	-559	-964
Information Technology (IT)	-223	-524	-747
Automobiles	-222	-450	-672
Capital Goods	-303	-355	-658
Fast Moving Consumer Goods (FMCG)	-131	-496	-627
Healthcare	-169	-336	-505

Data Source: NSDL

FPI selling was once again led by BFSI, but there were a total of 7 sectors that saw more than $500 Million selling in January 2025. Apart from BFSI, other sectors that witnessed heavy selling were Consumer Services, IT, Automobiles, Capital Goods, FMCG, and Healthcare. Even defensives were not spared. Overall, the gross selling in the month was to the tune of $(9.33) Billion.

OUTLOOK FOR FPI FLOWS IN COMING MONTHS

With the Budget 2025-26 out, and having limited impact on the markets, the action moves back to Trump economics. Markets are worried that if Trump gets away with his arbitrary tariffs on other countries, the world could soon see an internecine trade war. There is the RBI Monetary Policy meeting coming up on Friday; which is expected to cut rates by 25 bps. However, for now, the FPI action will largely be focused on Trump tariffs and the Yuan.