In February, the National Securities Depository Ltd. (NSDL) reported that FPI inflows into Indian equity were ₹1,539 crore ($186 million). During this period, FPIs bought securities after selling ₹25,744 crore ($3,096 million) in January 2024.
Overall, FPI inflows for the month totaled ₹31,817 crores ($3,834 million or $3.8 billion), which included debt, hybrid, debt-VR, and equities.
As of today’s date in the calendar year 2024, the cumulative investment by foreign portfolio investors (FPIs) amounts to ₹40,783 crore, or $4,920 million. This total includes investments in debt, hybrid, debt-VRR, and equity funds.
The notable increase in FII inflows into debt was primarily attributed to the anticipation of the inclusion of Indian bonds in the JP Morgan global bond index, resulting in heightened demand for Indian debt securities.
Furthermore, the inclination towards debt investments over equities in February 2024 was influenced by several factors, including the stability and appeal of Indian debt instruments, expectations of reduced strain on the borrowing calendar due to fiscal deficit projections, and the positive sentiment foreign investors hold towards Indian bonds.
Here are the top sectors that saw significant FPI inflows up to ₹7,538 crore in February 2024
Consumer Services sector
The consumer services sector in India encompasses various industries that cater to the needs and desires of consumers. This covers a wide range of areas such as education, legal services, medical services, restaurants, travel, insurance, media, and visual design.
According to the report by BMI, India’s consumer market is set to become the world’s third-largest by 2027 as the number of middle to high-income households rises.
In February, the consumer services sector witnessed the highest Foreign Portfolio Investment (FPI) inflows, reaching ₹ 7,538 crore. This amount is more than eight times greater than the inflows recorded in January, which stood at Rs 918 crore.according to data from NSDL. The S&P BSE Consumer Discretionary Index climbed 4 percent in February.
Here are the major consumer service stocks in this sector, such as Jubilant FoodWorks, LT Foods, Nestle, Colgate-Palmolive, and Zomato.
In 2024, consumer services in India are expected to become costlier as platforms aim for profitability. Quick commerce platforms may expand into e-commerce categories, electric vehicles (EVs) are likely to see increased adoption in mobility, and new platforms may emerge in smaller cities backed by initiatives like ONDC.
Automobile and Auto Components sector
The automobile and auto components sector encompasses a wide range of companies involved in the manufacturing, distribution, and sale of vehicles and their parts.
The auto components sector in India boasts a range of major players contributing significantly to the industry’s growth and development.
India is emerging as a global hub for auto component sourcing, with over 25% of its production being exported annually. The industry is expected to reach 30 billion US dollars in exports by FY26, driven by competitive advantages in categories like shafts, bearings, and fasteners.
The automobiles and auto components sector was second in the queue, In February, FII capital inflows into the automobile and auto component sectors were ₹5,542. The S&P BSE Auto index climbed 6.42 percent in February.
Here are the major auto sector stocks, such as Motherson Sumi Wiring India, Varroc Engineering, Pricol, Maruti Suzuki India Ltd, Hero MotoCorp Ltd, Rajratan Global Wire, and GNA Axles.
Healthcare sector
The healthcare industry in India comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment. The industry is growing at a tremendous pace owing to its strengthening coverage, services, and increasing expenditure by both public and private players.
The digital transformation of India’s healthcare industry has the potential to accelerate tenfold, from $2.7 billion in 2022 to approximately $37 billion by 2030, according to a report by Boston Consulting Group (BCG) and B Capital.
The healthcare sector was in the third queue for the inflow of funds, In February, this sector was recognised as popular among FIIs, with an inflow of ₹5,199 crores. The S&P BSE Healthcare Index returned 3.74 percent in February.
Here are the major healthcare stocks in this sector, such as Cipla, Divislab, Mankind, and Lupin.
Here are the top sectors that saw significant FPI outflows up to ₹7,592 crore in February 2024
Financial Services sector
The financial service sector is a major segment of the economy composed of companies and institutions that provide commercial and retail customers with financial services.
Financial services comprise both banking and Non-Banking lending institutions. Insurance and asset management companies are also part of the financial services sector.
The fintech industry is the new edge service of the financial services sector. India’s FinTech industry market size was $50 billion in 2021 and is estimated at ~$150 billion by 2025.
In February, the financial services sector witnessed the highest outflows of FII capital, amounting to ₹7,592 crore. Concurrently, the S&P BSE Financial Services index experienced a 0.9% decline during the same month.
Financial Services Index constituents include 360 ONE WAM Ltd, Aditya Birla Capital Ltd., Bajaj Finserv Ltd., AU Small Finance Bank Ltd., Axis Bank Ltd., and many more.
Fast Moving Consumer Goods sector
Fast-moving consumer goods (FMCG) are products that are sold quickly and at a relatively low cost. These goods include non-durable household items such as packaged foods, beverages, toiletries, candies, cosmetics, over-the-counter drugs, dry goods, and other consumables. Examples of FMCG products include toothpaste, soap, shampoo, laundry detergent, paper towels, razors etc.
The growth rate of the Fast-Moving Consumer Goods (FMCG) sector in India is expected to increase at a compound annual growth rate (CAGR) of 27.9 percent from 2023 to 2029. Furthermore, the market size of FMCG in India was valued at 230.14 billion US dollars in 2023 and is expected to reach nearly 1007.45 billion US dollars by 2029.
In February, the Fast Moving Consumer Goods sector experienced the second-highest outflow of funds, with FII capital outflows totaling ₹4,472 crores. The S&P BSE Fast Moving Consumer Goods index also witnessed a decline 2.50% during the same month.
Here are the major players in the Fast Moving Consumer Goods sector, ITC, Hindustan Unilever, Nestle, Britannia, Dabur, Godrej Group and Marico.
Construction sector
The construction sector involves the building construction, civil engineering, and speciality trade industries, playing a vital role in the economy by contributing to infrastructure development and creating employment opportunities.
The Construction sector in India is projected to achieve an AAGR of more than 5% during 2024-2027. Furthermore, the market size of the construction industry in India was valued at $701.7 billion in 2022 and is expected to reach nearly $1.4 trillion by 2025.
Here are the major players in the Construction sector, Larsen & Toubro Limited, Megha Engineering & Infrastructures, and KEC International Limited.
Finally, the construction sector witnessed the third-highest outflow. In February, foreign institutional investor (FII) capital outflows from the construction sector amounted to ₹4,494 crore. Additionally, the S&P BSE India Infrastructure Index recorded a slight gain of 0.9% in February.
Written by Omkar Chitnis
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