FPIs turn net buyers in second half of March 2025; led by BFSI

7 Apr 2025 , 10:21 AM

FPIS NET SELLING MODERATES TO $(402) MILLION IN MAR-25

The second half of March 2025 was a kind of blessing in disguise for FPI flows. After $13 billion of net selling by FPIs in Jan-Feb 2025, and another $(3,446) Million in the first half of March, the tide turned in the second half of March. In contrast to the first half of March, the second half saw net buying by FPIs to the tune of $3,044 Million, resulting in net selling of just about $(402) Million for the month of March 2025.

Domestic data flows were relatively stable in March 2025. Where there were concerns over the upcoming Trump Tariffs (eventually he did impose 27% reciprocal tariffs), the markets were more enthused by the possibility of another rate cut by the RBI MPC. After cutting 25 bps in February, markets see a very strong possibility of another 25 bps cut in April, especially considering that food inflation has come down sharply.

Let us turn to the macro picture of flows across equity and debt for March 2025. For the month, FPIs were net sellers in secondary market equities worth ₹(6,028) Crore, but infused ₹2,055 Crore into IPOs; making them net sellers in equities of ₹(3,973) Crore. However, debt saw net FPI inflows of ₹36,954 Crore in March 2025; resulting in overall  FPI outflows of ₹(32,981) Crore for the month of March.

FPI AUC BOUNCES SHARPLY IN MARCH 2025

Assets under custody (AUC) is a function of FPI flows and price accretion or depletion (as the case may be). Between December 2024 and February 2025, FPI AUC fell from $831 Billion to $714 Billion. However, in March 2025, the FPI AUC saw a bounce back to $781 Billion. FPI AUC had peaked at $931 Billion in September 2024.

Industry Group	FPI AUC (Mar-25) ($ Billion)	FPI AUC (Feb-25) ($ Billion)
Financials (BFSI)	244.03	220.05
Information Technology (IT)	70.01	70.42
Oil & Gas	54.62	49.98
Healthcare and Pharmaceuticals	54.07	48.64
Automobiles and Auto Components	52.69	49.79
Fast Moving Consumer Goods (FMCG)	42.93	39.61
Capital Goods	37.95	32.60
Telecommunications	35.20	31.16
Consumer Services	31.65	30.60
Power (generation and transmission)	28.97	24.38
Metals and Mining	23.41	20.63
Consumer Durables	21.58	20.48
Services	16.23	14.44
Realty	15.93	14.60
Construction	14.18	12.63
Chemicals	13.59	12.22
Cement	13.28	11.68
Top 17 Sectors	770.29	703.91
Other 6 sectors	10.31	9.87
Total FPI AUC	780.60	713.78

Data Source: NSDL

The table above captures the top 17 sectors where the FPI AUC is more than $10 Billion as of the close of March 2025. Out of the 23 sectors as identified by NSDL, the AUC of the top-17 sectors accounted for 98.7% of total FPI AUC of $780.60 Billion. Between February 2025 and March 2025, the FPI AUC is up 9.4%. However, the FPI AUC as of March 2025 still remains nearly -16.2% below the peak AUC as of September 2024.

What about the key components of AUC as of February 2025. At $244.03 Billion, BFSI continues to dominate the AUC stakes and has also seen the best AUC accretion over Feb-25. Other key sectors in terms of FPI AUC include; while IT, Oil, healthcare, and Automobiles, in that order. In terms of MOM change in AUC in March 2025, there was AUC stagnation in IT sector, but all the other sectors saw an accretion in AUC on a MOM basis.

FPI BUYING DOMINATED BY BFSI AND TELECOM

In March 2025, FPIs were net sellers worth $(402) Million in Indian equities; with FPI selling of $(3,446) Million in the first half and $3,044 Million of FPI buying in the second half. Despite this turnaround, there just 4 sectors seeing meaningful buying in March 2025.

FPI Net Buying in Sectors	H1-Mar-25 ($ Million)	H2- Mar-25 ($ Million)	Mar-25 ($ Million)
Financial Services (BFSI)	-380	+2,055	+1,675
Telecommunications	-39	+399	+360
Others	+89	+171	+260
Metals and Mining	+135	+84	+219

Data Source: NSDL

The above sectors led the recovery in FPI flows in the second half of March. However, the action was largely concentrated in the financial services sector, which is where most of the alpha buying came from the FPIs. That is not surprising, considering the substantial weight that BFSI carries in the Nifty index overall.

BUT, FPI SELLING WAS INTENSE TOO IN MAR-25

Here is a sectoral break-up of FPI net outflows from Indian equities in March 2025.

FPI Net Selling in Sectors	H1-Mar-25 ($ Million)	H2- Mar-25 ($ Million)	Mar-25 ($ Million)
Information Technology (IT)	-796	-177	-973
Fast Moving Consumer Goods (FMCG)	-586	-57	-643
Oil & Gas	-111	286	-397
Consumer Services	-218	-135	-353
Automobiles & Auto Components	-418	+91	-327
Cement	-168	-15	-183
Consumer Durables	-180	+6	-174

Data Source: NSDL

In fact, if you leave out BFSI and, to some extent telecom, the FPI selling was quite intense in other sectors. While 5 sectors saw net selling of more than $300 Million, there were 2 sectors showing net selling of more than $500 million. In the case of IT, FMCG, and Consumer Services; FPIs were net sellers in the second half of March 2025 too.

OUTLOOK FOR FPI FLOWS IN COMING MONTHS

In the medium term, there are several key data points, but for now the outlook for FPI flows would be purely driven by the impact of the 27% reciprocal tariffs imposed on India by the US. This month will also see the RBI monetary policy, where another rate cut of 25 bps is expected. Also, the US Fed will publish the minutes of its March Fed meeting. There are several data points, but for now, the focus will entirely be on the reciprocal tariffs.