India’s FII assets are over $1 trillion and equity holdings are at a 6-month high

Foreign Institutional Investor (FII) ownership in Indian listed companies has reached a new high. In September, FII equity assets under custody (AUC) as a percentage of total market capitalization of all companies listed on the Bombay Stock Exchange (BSE) touched a six-month high. This growth is largely due to significant investment resulting from a more cautious approach by the US Federal Reserve and its recent reduction in interest rates.

For the first time, the total assets held by FIIs across various investment vehicles, including debt, equity, alternative investment funds (AIFs), mutual funds and hybrid funds, have crossed the USD 1 trillion mark.

This figure represents a 26.7% increase year-to-date and the highest growth rate since December 2017. Specifically, equity AUC was $930 billion, while debt and other investments were $76.83 billion.

In 2023, total FII assets retained increased by 25.5%, from $633.56 billion in 2022 to $795.20 billion. The only years that saw a decline in the total number of assets held were 2018 and 2022.

FII participation in Indian equities rose to 16.43%, the highest level since March 2024. In September alone, FIIs invested nearly $7 billion in Indian equities. This marks a significant increase over August, when investments were just $873 million, making September the highest buying month since December 2023, when FIIs bought net shares worth $7.9 billion.

Investment patterns show that over Rs 27,200 crore has flowed into the financial services sector, making it the largest single sector allocation. Healthcare and real estate also attracted significant investments, garnering Rs 6,639 crore and Rs 5,375 crore respectively.

Other industries that enjoyed great interest from foreign investors include:

• Fast Moving Consumer Goods (FMCG): Rs 4,900 crore
• Capital goods: Rs 4,000 crore
• Consumer durables: Rs 3,736 crore
• Telecom: Rs 1,935 crore
• Services: Rs 1,725 ​​crore
• Chemicals: Rs 1,445 crore
• Power: Rs 1,409 crore
• Metals and Mining: Rs 1,155 crore
• Construction: Rs 1,095 crore

Despite these strong investments in some sectors, FIIs have decided to sell shares. Notable sales included:

• Consumer Services: Rs 2,940 crore
• Cars: Rs 2,106 crore
• Information Technology: Rs 1,219 crore
• Construction materials: Rs 901 crore
• Oil and gas: Rs 640 crore

Apart from equity investments, FIIs also invested $3.75 billion in Indian debt in September, taking the total debt investments for 2024 to $17.09 billion. Overall, total investments in debt, equity, AIFs, mutual funds and hybrid funds reached approximately $30.66 billion this year, surpassing last year’s total of $28.70 billion.