FIIs pull out Rs 1.12 lakh cr from India in Jan-Feb: What are they selling?

Key sectors impacted include financials, healthcare, and FMCG, while telecom saw inflows.

Despite Indian equities facing a fifth consecutive month of correction, monthly SIP contributions remained steady at around Rs 26,000 crore for the third consecutive month in February 2025. Notably, the cumulative SIP inflows for the year have already exceeded the previous fiscal year’s total by over 32.2%, reinforcing the optimism among Indian retail investors, said a report by Bajaj Broking.

 

Bajaj Broking’s research team has compiled data on the Mutual Fund and FPI movements for February 2024. Below are the key highlights:

 

FII Outflows: Rs 34,574  crore in February 

Foreign investors continued their net selling streak in February 2024, pulling out Rs 34,574 crore from the Indian equity markets. This move pushed the total outflows for the first two months of 2025 to a staggering Rs 1.12 lakh crore, influenced by rising US bond yields, a strengthening U.S. dollar, and global economic uncertainties. The outflows highlight a broader shift in investor focus toward US assets as concerns over corporate earnings and global liquidity issues mount. 

 

Sector-Wise Trends: Telecom and capital goods attract inflows, others face sell-offs

The market’s sector-wise performance showed significant divergence in investor behavior. While some sectors saw strong inflows, others experienced substantial outflows.

 

Telecom emerged as the biggest beneficiary of FII inflows, attracting Rs 5,661 crore, marking the second consecutive month of positive foreign investments. This was largely driven by the ongoing 5G expansion and ARPU (Average Revenue Per User) growth, with key players like Bharti Airtel and Reliance Jio seeing increased investor confidence.

 

In stark contrast, Automobile stocks witnessed an outflow of Rs 3,279 crore. The sector faced profit-booking amid concerns over slowing rural demand and rising input costs, affecting major automakers like Maruti Suzuki, Tata Motors, and Bajaj Auto, particularly in the electric vehicle (EV) and luxury car segments.

 

Healthcare also saw continued FII outflows of Rs 2,996 crore, as regulatory concerns, including scrutiny from the U.S. FDA on Indian pharmaceutical firms, weighed heavily on investor sentiment. Leading pharmaceutical stocks such as Sun Pharma, Dr. Reddy’s, and Cipla faced significant sell-offs.

 

The FMCG sector experienced outflows of Rs 2,568 crore as foreign investors rotated their capital towards higher-growth sectors. Weak rural consumption trends and lower-than-expected volume growth in companies like Hindustan Unilever, ITC, and Nestlé India were key drivers behind this retreat.

 

The Financials sector remained one of the hardest-hit, with FIIs trimming their holdings in major banks and NBFCs amid concerns over rising interest rates and tightening global liquidity. This trend of selling continued from January, contributing to a further reduction in the weightage of the financial sector.

 

Finally, Information Technology (IT) also saw repositioning by FIIs, as global demand weakened and tech spending in key markets like the U.S. and Europe slowed, leading to muted growth prospects for Indian IT firms.