FPIs Net Sell $(168) Million in Equity in July First Half; Buy Bonds

The first half of July 2025 has witnessed a mixed trend in Foreign Portfolio Investors (FPI) flows in India. While equities saw a marginal net sell of $(168) million, FPIs were aggressive buyers of bonds, purchasing $959 million. This shift in investment strategy could indicate a cautious sentiment towards equities amidst global macro risks and a preference for locking in better yields through bonds.

FPI Flow Trends for July 2025

The first fortnight of July 2025 revealed a cautious approach from FPIs. While the equity market faced net selling, bonds attracted substantial buying interest. Specifically, FPIs sold equities worth $(168) million but bought bonds worth $959 million. This shift indicates that investors might be hedging their portfolios in the face of ongoing macroeconomic uncertainties and higher rates available in bonds.

Key Figures:

• FPI equity AUC stood at $858 billion on July 15, 2025, compared to $831 billion on June 15, 2025.
• The overall FPI AUC reached $936 billion as of July 2025, still lower than the September 2024 peak of $1.01 trillion.

Sectoral Breakdown of FPI Flows

Sectors with Significant Net Buying:

• Services & Consumer Services: Net buying of $429 million, with significant interest in India proxies like Eternal and Swiggy.
• Metals & Mining: Attracted strong buying due to global factors and India’s rare earths policy.
• Capital Goods: Net buying driven by optimism surrounding a potential capex turnaround.
• Oil & Gas: Over $100 million in net buying, fueled by expectations of favorable outcomes for downstream OMCs.

Sectors with Net Selling:

• IT Sector: Led the sell-off with $(638) million due to concerns about tech spending and the impact of TCS Q1 results.
• FMCG & Consumer Durables: Both saw net selling of over $(150) million each, driven by weak urban demand.
• Automobile Sector: $(135) million net sell-off due to tariff concerns and weak monthly performance from Indian auto companies.

Data Source: NSDL

Observations:

• FPIs showed a cautious stance, with a clear preference for bonds over equities.
• BFSI, consumer services, and metals & mining led the buying, while IT, FMCG, and automobile sectors experienced substantial selling pressure.
• Historically, FPI flows tend to pick up in the second half of July, so the next fortnight will provide valuable insights into the overall sentiment for the month.

Conclusion

The first half of July 2025 saw a mixed bag of FPI flows, with cautious sentiment prevailing in the equity markets. The bond market emerged as a clear favorite for FPIs amidst macroeconomic uncertainties. The performance of sectors such as BFSI, metals & mining, and capital goods indicated strong thematic plays, while IT, FMCG, and automobile sectors faced headwinds. The second half of July will likely provide further clarity on the market direction and FPI sentiment.

Disclaimer: The information provided in this article is for informational purposes only. It does not constitute financial, legal, or investment advice. Please consult a qualified professional for advice specific to your situation. The views expressed in this article are based on publicly available information and may not reflect the most current market conditions.