Stagecraft of capital: Mkt marionette FPIs pull strings on consumer, power

Timed tugs tilt discretionary sectors, letting defensive and capital-heavy names take the lead

Foreign portfolio investors (FPIs) were net sellers of Indian equities to the tune of ₹9,761 crore in the first fortnight of September, with consumer services and power stocks bearing the brunt of outflows. 

Data from Prime Infobase shows FPIs withdrew ₹3,246 crore from consumer services. This sector covers areas tied to discretionary spending, including hospitality, entertainment, and retail. Experts say FPIs often scale back exposure to these segments during periods of macroeconomic uncertainty. 

Other sectors that saw the highest FPI withdrawals were power (₹2,107 crore), followed by information technology (IT) at ₹2,014 crore, real estate at ₹1,927 crore, and healthcare at ₹1,601 crore. 

Analysts link the selloff in power stocks to stretched valuations. In IT, concerns over tepid growth and recent buyback announcements prompted FPIs to trim their positions. 

“Even without tariffs, IT revenue growth is unlikely to exceed 2-4 per cent. Infosys’ buyback announcement sparked speculation that others may follow, triggering some buying in technology stocks. FPIs are using this as an exit point because short- to medium-term prospects remain limited,” said Chokkalingam G, founder of Equinomics Research.

 

Meanwhile, the automotive (auto) and auto components sector attracted the highest inflows at ₹1,908 crore, driven by optimism over goods and services tax rate rationalisation. FPIs also increased allocations in financial services (₹1,634 crore), capital goods (₹1,518 crore), and metals and mining (₹1,394 crore).

 

Financial services continue to hold the largest share in FPI portfolios at 30.95 per cent, followed by auto at 7.9 per cent. Despite recent outflows, IT remains the third-largest holding at 7.24 per cent.