Whalesbook
Foreign portfolio investors (FPIs) are strategically shifting their Indian equity allocations, moving from concentrated holdings in large companies to a wider range of stocks. While overall FPI ownership in Indian equities has decreased, the number of companies with FPI stakes above 1% has grown from about 900 in March 2022 to nearly 1,300 currently. This shows wider participation across various sectors and market capitalizations.
Selling Pressure on Large-Cap Leaders
FPI selling is most notable in large-cap stocks. The combined stake of HDFC Bank and its former parent HDFC Ltd in FPI portfolios has shrunk significantly. Reliance Industries and software firm Infosys have also seen significant selling. Major reductions were also recorded in Tata Consultancy Services and Kotak Mahindra Bank.
Key Sectors See FPI Departures
Financials, Information Technology, energy, and consumer discretionary companies have faced the most FPI selling since 2022. Financial services alone saw net outflows totaling ₹1.8 trillion, with IT & hardware and energy sectors also experiencing large withdrawals.
Shifting to Growth Opportunities
Simultaneously, FPIs are investing in high-growth sectors and emerging companies. FPIs have notably increased stakes in companies like One 97 Communications (Paytm), Polycab India, and HDFC Asset Management Company. Mid-cap firms such as Max Healthcare Institute and small/micro-cap companies including TD Power Systems and Home First Finance Company India have also attracted substantial FPI inflows, showing a preference for domestic growth stories.
Selective Approach Amid Outflows
This trend matches recent market data, which shows FPIs remaining net sellers in April. Total outflows from Indian equities this calendar year continue the selling trend from last year, highlighting a cautious but selective approach to Indian markets.