FIIs pump ₹25,000cr into India; IT, financials see strong buying

FIIs pump ₹25,000cr into India; IT, financials see strong buying
05 Sep 2024

Foreign institutional investors (FIIs) have made a significant shift in their investment strategy, injecting ₹25,000 crore into eight Indian sectors during the second half of August.

This move comes after substantial sell-offs in the initial weeks of the month due to global instability and elevated domestic valuations.

The consumer durables sector emerged as the top beneficiary of this shift, attracting an investment of approximately ₹5,297 crore from FIIs.

IT and financial sectors witness robust FII inflows
Sectoral analysis

The information technology (IT), services, and financial sectors also experienced substantial FII inflows.

The IT sector attracted funds worth ₹4,529 crore, while the services and financial sectors drew investments of ₹4,251 crore and ₹2,782 crore respectively.

This surge in investment is particularly noteworthy for the services and financial sectors as they had previously faced significant sell-offs in July and early August.

Other sectors also benefit from FII investment shift
Diverse investment

In addition to the consumer durables, IT, services, and financial sectors, other areas also saw an increase in FII buying.

These included oil & gas (₹2,518 crore), healthcare (₹2,369 crore), consumer services (₹1,962 crore), and fast-moving consumer goods (FMCG) (₹1,815 crore).

This diverse investment strategy by FIIs indicates a broad-based confidence in various sectors of the Indian economy.

Market volatility and FII sell-offs in Indian sectors
Market trends

The Indian markets faced significant volatility in early August due to the unwinding of the Yen carry trade and concerns about a potential slowdown in US markets.

However, a partial recovery was observed later in the month, fueled by growing expectations of a rate cut in September 2024.

Despite this overall positive trend, some sectors experienced selling pressure from FIIs with the power sector leading with outflows exceeding ₹2,305 crore.