FPIs Buy the Most in Fortnight Since April 2025; IT Still a Sell
Agencies report that foreign investors made significant moves in the Indian stock market, with a net investment of ₹33,487 crore across 15 sectors during the first half of February—the highest fortnightly purchase since April 2025. Despite this surge, the IT sector remains a major area of concern.
Key Highlights from Foreign Portfolio Investments (FPIs)
– Total Investment: ₹33,487 crore across 15 sectors in the first half of February.
– Sector Focus:
– Oil & Gas: ₹4,678 crore invested.
– Capital Goods: ₹8,032 crore, a notable increase from ₹2,761 crore in January, bolstered by the government’s ₹4,470 crore stake sale in BHEL.
– Financial Services: ₹6,175 crore, rebounding after a sell-off of ₹8,592 crore in January.
Analysis of Sector Performance
– Capital Goods: The capital goods sector has historically underperformed the market. However, the lack of negative budget announcements led global investors to reallocate funds towards it.
– Commentary from Experts: Siddarth Bhamre, head of Research at Asit C Mehta Intermediates, noted that the government’s actions encouraged a positive outlook.
– Financial Services: Investors have been drawn back to banks and financial services due to strong third-quarter performance, despite concerns about valuations.
– Expert Insights: Rajesh Singhla, CEO & Fund Manager at Alpha AIF, highlighted that foreign inflows into this sector correlate with improved earnings projections.
IT Sector Faces Major Challenges
In stark contrast, the IT sector has seen a notable decline, with foreign investors selling off shares worth over ₹10,000 crore in the first half of February. Cumulatively, the sector suffered nearly ₹75,000 crore in outflows throughout 2025, reflecting deepening concerns over the future of software services amid the rise of AI.
– Impact of AI: The fear of AI disrupting labor-intensive roles in IT is prompting investors to rethink allocations. Bhamre indicated the potential for further selling as worries mount.
– Market Performance: The Nifty IT index has decreased approximately 15% this year, while the overall Nifty index is down just 2.6%.
Conclusion
The latest round of foreign investments showcases a strategic shift from the IT sector to more tangible sectors such as capital goods and financial services, demonstrating a cautious yet optimistic outlook on the real economy. While FPIs have recorded their highest activity in nearly two years, the IT sector continues to grapple with investor skepticism and the looming threat of AI disruption. Investors will need to closely monitor these trends as they unfold in the coming weeks.