Understanding Foreign Institutional Investors (FII) in the Indian Stock Market
FII Selling & Buying Trends
FII Selling & Buying trends – Foreign institutional investors (FIIs) have been buying Indian stocks this month, with a focus on financials and IT sectors. However, three sectors – oil and gas, auto, and FMCG – saw a significant exit of $1 billion.
In the first half of December, FIIs sold stocks worth Rs 5,337 crore in the oil and gas sector, Rs 1,823 crore in auto, and Rs 1,655 crore in FMCG. The total sell-off in these sectors crossed the $1 billion mark.
What are FII Selling and Buying
FIIs were net buyers of Rs 22,766 crore in the first half of December, compared to Rs 809 crore in the previous period. Financial services, IT, and realty were the top sectors where FIIs were buying stocks.
On the other hand, oil and gas have been the top sector for FII selling in 2024, followed by financials. Sectors like telecom, real estate, IT, healthcare, consumer services, and capital goods have seen buying interest from FIIs.
| Financial Services | 9,597 | 7,424 |
|---|---|---|
| IT | 2,429 | 6,754 |
| Realty | 1,367 | 4,689 |
| Others | −44 | 2,974 |
| Consumer Services | 471 | 2,715 |
| Capital Goods | 681 | 2,657 |
| Healthcare | −254 | 1,917 |
| Construction | 89 | 1,148 |
| Metals & Mining | 86 | 847 |
| Chemicals | −197 | 646 |
| Telecom | −3 | 627 |
| Services | −2,472 | 553 |
| Textiles | 320 | 138 |
| Forest Materials | 29 | 32 |
| Media | −55 | 15 |
| Utilities | 89 | 15 |
| Sovereign | 0 | 0 |
| Diversified | −6 | −96 |
| Construction Materials | −1,913 | −174 |
| Power | 109 | −552 |
Reasons Behind FII Actions
FIIs sold stocks worth Rs 116,437 crore in October and November but have been selling more in December due to rising bond yields and a stronger US dollar. The holiday season in Europe and North America also leads to reduced FII participation in Indian equities.
The Federal Reserve’s projection of fewer interest rate cuts in 2025 has added to the selling pressure. As we enter 2025, brokerages predict a double-digit return for the Nifty but with limited upside potential.
Market valuations are slightly above the five-year average, and rate cuts by the RBI are expected. Large-cap stocks are preferred over small and mid-caps in the current market scenario.
Bank stocks are a top pick for brokerages, with Morgan Stanley setting a target of 93,000 for the Sensex due to strong earnings and domestic flows supporting India’s investment case.
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Stay tuned for more updates and insights on the stock market! For more insights on investing in the Indian stock market, check out resources like Moneycontrol and NSE India.
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