FIIs Favour Metals And Capital Goods Amid Broad-Based January Selloff

Foreign institutional investors (FIIs) continued to reduce exposure to Indian equities in January but diverged from the broader selling trend by increasing allocations to metal and capital goods stocks, as per data published by the National Securities Depository Limited (NSDL).

NSDL data showed that FIIs invested ₹8,837 crore in metal stocks during the second half of January, following net purchases of ₹2,689 crore in the first half of the month. This made metals one of the few sectors to attract sustained foreign inflows through the month despite weakness across the wider market.

Capital goods stocks also saw consistent buying interest. FIIs invested ₹2,435 crore in the sector in the second half of January, after purchasing ₹326 crore worth of shares in the first half, according to NSDL data.

Sector-Wise FII Inflows And Outflows

In contrast to metals and capital goods, most other sectors witnessed continued foreign selling. Financial services stocks saw net outflows of ₹5,402 crore in the second half of January, following selling of ₹3,190 crore in the first half, NSDL data showed.

The healthcare sector also remained under pressure, with FIIs selling shares worth ₹5,113 crore in the second half of the month after outflows of ₹1,049 crore in the first half. Consumer services stocks recorded net sales of ₹3,561 crore in the second half, following selling of ₹1,952 crore earlier in the month.

Telecom stocks saw outflows of ₹3,280 crore in the second half of January after FIIs sold ₹1,497 crore in the first half. The automobile sector also remained a net sell, with foreign investors offloading shares worth ₹3,094 crore in the latter half of the month, compared with ₹500 crore in the first half.

Continued Pressure On Multiple Segments

Other sectors also recorded persistent selling. Realty stocks saw outflows of ₹1,956 crore in the second half of January after ₹500 crore was sold in the first half. Power sector stocks recorded net sales of ₹1,527 crore in the second half, following ₹699 crore of selling earlier in the month. Consumer durables stocks saw outflows of ₹1,372 crore in the latter half of January, compared with ₹340 crore in the first half.

FMCG stocks were among the most impacted over the full month. FIIs sold ₹1,369 crore worth of FMCG shares in the second half of January after heavy outflows of ₹6,128 crore in the first half, according to NSDL. Construction stocks also remained under pressure, with net sales of ₹1,077 crore in the second half, following ₹455 crore of selling earlier in the month.

A Quick Look at the January FII Trend

In general, foreign equity exposure went down across all sectors in January, with metals and capital goods being two notable exceptions. According to NSDL data, FII activity during the month was very selective, with inflows mostly going to a few sectors and selling continuing in financials, consumption-linked segments, and cyclicals.