FPIs buy the most in fortnight since April 2025, IT still a sell

Synopsis

Foreign investors poured significant funds into capital goods, financials, and oil & gas sectors in early February. This marked their highest fortnightly purchases since April 2025. Conversely, IT stocks saw substantial selling pressure. This shift reflects a move from services to real economy sectors. The IT sector has experienced a notable decline this year.

Mumbai: Overseas investors funnelled the largest allocations into capital goods, financials and oil & gas shares in the first half of February as they pumped ₹33,487 crore across 15 sectors during the period - their highest fortnightly purchases since the second half of April 2025.

Capital Goods shares received ₹8,032 crore in the period February 1-15, up from ₹2,761 crore in January, with the government's stake sale in BHEL worth ₹4,470 crore partly contributing to the inflows.

"The capital goods sector has underperformed the market, and there was nothing negative in the budget on the sector which could have prompted global investors to reallocate funds," said Siddarth Bhamre, head of Research, Asit C Mehta Intermediates.

Rajesh Singhla, CEO & Fund Manager, Alpha AIF, said sectors such as capital goods, textiles, gems and jewellery benefited from the US-India trade deal framework announced in the first week of the month, which is likely to have triggered foreign inflows.

Agencies

top up Cap Goods, Flip on Financials Investors buy ₹33,487 cr of shares across 15 sectors in Feb first half l Allocations move to ‘pockets in the real economy’

Financial services saw foreign investment worth ₹6,175 crore in the first 15 days of February, after witnessing selling of ₹8,592 crore in January. Singhla said banks and financial services reported a strong set of numbers in the third quarter, which could have attracted foreign investment, though sector valuations are not very attractive.

Foreign investors bought shares worth ₹4,678 crore in the oil & gas sector in the first half of February.

Among sectors that saw selling, global investors dumped ₹13,812 crore across eight sectors in the first half of February, with IT accounting for over ₹10,000 crore of the total. The sector bore the brunt of foreign selling in 2025 as investors offloaded nearly ₹75,000 crore, the highest among sectors, amid worries about the impact of AI-related disruption on the software services exporters' prospects.

"Fears of AI making the sector less labour-intensive could spark further selling," said Bhamre. "Overseas investors have shifted allocation from services to pockets in the real economy in this fortnight."

The Nifty IT index has slumped almost 15% so far this year, while the benchmark Nifty is down 2.6% in the same period.

"The foreign selling in IT stocks was due to fears of the earnings trending lower as the threat of disruptions due to AI loomed large, but most of the selling was sentimental, and the sell-off was an overreaction," said Singhla.

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