FIIs Turned Net Buyers in December 2024 After 2 Months: Foreign institutional investors (FIIs) remained net buyers in December 2024. Despite this, a decline of 2% was seen in Nifty 50 during December. At first glance this may seem a bit shocking, but when we go into the details of the data, the reason becomes clear. The FII trend in the Indian stock market was different in the first 15 days of December 2024 and completely opposite during the latter half of the month. Apart from this, FIIs have also shown different trends in terms of buying and selling in different sectors. All this information is given in JM Financial’s FII Monthly Flow Tracker for the month of December. This report also shows in which sectors of the Indian market FIIs have bought and where their emphasis has been on selling.
What was the pattern of FII buying and selling?
In fact, FIIs became net buyers in December 2024 after being net sellers for two consecutive months (October, November 2024). During the entire month of December 2024, FIIs made a net investment of US $ 1.3 billion (Rs 111 billion) in the Indian market. Actually, this purchasing process started in the second half of November 2024. In the first half (1H) of December, FIIs bought shares worth US$3.1 billion (Rs 269 billion). But in the second half (2H), the selling process started, in which foreign institutional investors sold shares worth US $ 1.9 billion (Rs 158 billion). In the four trading sessions after Christmas, FIIs sold a total of about US $ 956 million, which increased the pressure on the market and led to a decline in Nifty 50.
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Selling in Oil & Gas, Auto and FMCG
Looking at the monthly flow tracker data in detail also reveals some more interesting things related to the behavior of foreign institutional investors in the case of stocks of Indian companies.FII in DecemberOil and Gas Sold US$1.3 billion from the sector for the third consecutive month. This trend continued for the fifth consecutive month in the auto sector, with sales worth US$513 million. Similarly, selling of US $ 327 million was also seen in the FMCG sector. Global economic conditions, fluctuations in oil prices and sector-specific challenges are believed to be the reasons behind the selling in these sectors.
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Big purchases in IT, Pharma and BFSI
On the other hand, the IT sector attracted the highest FII investment of US $ 1.1 billion in December. After this, US$ 442 million was invested in the pharma sector and US$ 368 million was invested in the BFSI (Banking, Financial Services and Insurance) and capital goods sectors. This trend shows that investors still consider the technology and healthcare sectors attractive for the long term. Investment in BFSI and capital goods reflects confidence in economic stability and infrastructure development.
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Why did Nifty fall despite FII buying?
Despite FIIs being net buyers, Nifty 50 saw a decline of 2%. The main reasons behind this can be considered to be sharp selling and sector-specific pressure in the second half of December. Additionally, continued selling in heavily weighted sectors like oil and gas and auto sector negatively impacted the index. The decline in trading activity after Christmas also weakened the market.
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In which sectors is the priority of FIIs changing?
In December, FIIs started investing again in sectors like capital goods, metals and telecom. These sectors were at the center of selling in November. This change shows that FIIs are paying attention to sector-specific opportunities and adjusting their strategies accordingly.Looking at the FII data of December 2024 in detail, it also becomes clear that many factors affect the balance of investment and selling in the Indian market.
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Long term trend of FII stake in Indian market
FII ownership as a % of total Indian equities stood at 16.1% by the end of December 2024, which was slightly higher than 16% in October 2024. However, it is slightly less than 16.8% in the same month of last year i.e. December 2023. In fact, the percentage of FII ownership in the Indian equity market has continuously declined in the last decade. It was 19.9% in December 2014, whereas it came down to 16.1% in December 2024. This data also shows the increasing influence of domestic investors in the Indian market.
Highlights of the report
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FIIs remain net buyers in December 2024; But the selling intensified in the second half of the month.
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FIIs sold the most in Oil & Gas, Auto and FMCG.
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FIIs invested the most in IT, Pharma, BFSI and Capital Goods.
