FPIs Shift Focus To Telecom As Financial, FMCG See Heavy Outflows In 2025

Foreign portfolio investors (FPIs) made the highest purchase in the telecommunications (telecom) sector during the fortnight from February 15-28, 2025, buying equities worth Rs 5,661 crore, according to data from the National Securities Depository (NSDL).

Following this, the information technology (IT) sector saw selective buying, with a net inflow of Rs 112 crore, down from Rs 693 crore in the previous fortnight. Similarly, chemicals, and media and entertainment also saw some buying. Barring these sectors, all other sectors witnessed net outflows.

The highest outflows, however, have been in automobile and auto ancillary segment, with FPIs selling equities worth Rs 3,279 crore during the period under review.

Healthcare and fast moving consumer goods (FMCG) also saw outflows of Rs 2,996 crore and 2,568 crore, respectively.

Says VK Vijayakumar, chief investment strategist, Geojit Financial Services: “Trump’s tariff threats have changed the focus of investors towards domestic consumption driven sectors like financials, telecom, hotels and aviation and away from externally linked sectors. This trend is volatile like Trump’s tariff policy.”

FPI Sectoral Activity in 2025

FPIs have offloaded FMCG stocks worth Rs 12,332 crore so far in 2025, which intensified after the announcement of the Union Budget, where in large tax relief was announced in a bid to boost domestic consumption.

Year-to-date (YTD), construction and construction material, capital goods, and auto and auto ancillary have seen an outflow of Rs Rs 12,144 crore, 10,161 crore, and Rs 9,792 crore, respectively.

The highest outflow in 2025 so far has been in the financial services sector, with FPIs exiting equities worth Rs 31,940 crore. However, the intensity of selling has come down.

On the buying side, telecom, chemicals, textiles, and media and entertainment saw YTD inflows of Rs 8,142 crore, Rs 784 crore, Rs 635 crore, and Rs 202 crore, respectively. Except for these sectors, all others have had net outflows this year. The IT sector had inflows in February, but is still in net outflow for the year.

FPI Selling Hits Rs 1.37 Lakh Crore In 2025

FPIs have overall sold Indian equities worth Rs 1,37,354 crore in 2025 so far, with Rs 24,753 crore of that sold in March alone, NSDL data showed. In February, FPIs sold equities worth Rs 34,574 crore, and in January, they offloaded Rs 78,027 crore.

This incessant selling has brought the total asset under custody (AUC) of FPIs to a 13-month low. As of February-end, FPIs held Rs 62,38,469 crore worth of Indian equities. The last time FPIs’ AUC was lower than this was in January 2024, at Rs 61,99,452 crore.

Says Vaibhav Porwal, co-founder, Dezerv: “US bonds currently offer attractive yields without the volatility or currency risk associated with emerging market equities. In addition, US interest rates have risen. Additionally, the 3 per cent rupee depreciation has eroded returns for foreign institutional investors (FIIs). Moreover, India levies taxes of 12.5 per cent on long-term and 20 per cent on short-term capital gains for FIIs, whereas alternative markets offer zero or lower tax environments.”

He adds, “These factors may have incentivised FIIs to allocate funds where they find valuation comfort and prompted them to reallocate investments to markets offering potentially better returns, such as China, the US, Brazil, or Thailand.”