Where did FIIs park money in Nov? IT, realty, BFSI see highest inflows

While sectors like IT, BFSI, and Real Estate remain attractive, Oil & Gas, Automobiles, Telecom, and FMCG face headwinds that have resulted in substantial outflows

 November 2024 saw Foreign Institutional Investors (FIIs) adjustting their portfolios amidst evolving market conditions. While Information Technology (IT), Banking, Financial Services, and Insurance (BFSI), and Real Estate (Realty) saw the largest inflows, Oil & Gas, Automobiles (Autos), Telecommunications (Telecom), and Fast-Moving Consumer Goods (FMCG) sectors experienced the most significant outflows, shows data analysed by JM Financial. 

 

Sectors with the Largest Inflows:

IT Sector: The Information Technology (IT) sector led the pack with inflows of $653 million in November 2024, continuing to benefit from robust global demand for digital services, cloud computing, and AI solutions. 

 

BFSI Sector: The Banking, Financial Services, and Insurance (BFSI) sector also saw strong inflows of $296 million. 

 

 

Real Estate: Real Estate (Realty) attracted inflows of $ 44 million, as the sector benefits from pent-up demand in housing and commercial real estate, bolstered by government incentives like affordable housing schemes.  

Sectors with the Largest Outflows:

Oil & Gas: The Oil & Gas sector saw the largest outflows of $1.6 billion, marking the second consecutive month of significant investor pullback. 

 

Automobiles: The Automobiles sector faced outflows of $884 million, continuing the trend of caution due to factors like rising raw material costs, slow adoption of electric vehicles (EVs), and sluggish demand for traditional vehicles. Investors opted for safer or higher-growth sectors, pulling back from the auto industry.

 

Telecom: Telecommunications (Telecom) saw outflows of $601 million. Intense competition and regulatory pressures continue to weigh on the sector’s outlook, leading to investor caution. 

 

FMCG: The Fast-Moving Consumer Goods (FMCG) sector experienced outflows of $167 million, as inflationary pressures and supply chain disruptions impacted margins. 

 

While November 2024 began with FIIs as net sellers, with outflows totaling Rs 195 billion ($2.3 billion) in the first half of the month, a positive shift occurred in the latter half. FIIs turned net buyers, injecting Rs 13 billion (USD 159 million) into the markets, showing signs of renewed confidence. Notably, in the final week of November, FIIs were particularly active, with inflows of Rs 52.6 billion (USD 619 million).

 

"Unlike October 2024 wherein the Indian equity markets (Nifty 50 index) corrected 6% and closed 8% lower from its all-time highs, the headline Index remaining largely flat in November 2024. FII outflows have decelerated to Rs 182 bn (USD 2.2 bn) in Nov’24, significantly lower than the Rs 919 bn (USD 10.9 bn) in October 24. Interestingly, FIIs turned net buyers in the H2 of November 2024 with inflows of Rs 13 bn ($159 mn), v/s outflows of Rs 195 bn ($ 2.3 bn) in H1. Oil

& Gas, Autos, Telecom and FMCG saw the largest FII outflows while IT, BFSI and Realty saw the largest inflows in Nov’24," said Shalin Choksy of JMLF.

 

As of November 2024, FII shareholding in Indian equities has slightly increased, rising to 16.1%, up from 16% in October 2024. This increase, while modest, marks a recovery from October’s 12-year low of 16%, where FII participation had dipped significantly due to various market challenges.

 

However, compared to the same period the previous year (November 2023), FII shareholding is still lower. In November 2023, FIIs held 16.8% of Indian equities.

 

Despite this reduction in shareholding, the total value of FII Equity Assets under Custody (AUC), which refers to the total market value of the equity investments held by FIIs, has seen a slight uptick. As of November 2024, the FII AUC stood at Rs 71.9 trillion, which is a small increase from Rs 71.1 trillion at the end of October 2024. This increase in assets indicates that while FIIs may have reduced their overall shareholding, they are still maintaining a sizable portfolio in Indian equities, and their overall investments are growing.