India's FII assets surpass $1 trillion, equity holdings at 6-month peak

For the first time, the total assets under custody of FIIs across various investment vehicles, including debt, equity, alternative investment funds (AIF), mutual funds, and hybrid funds, surpassed $1 trillion.

In Short

• FII equity holdings hit six-month high in September
• Total FII assets under custody surpass $1 trillion milestone
• FIIs invested nearly $7 billion in Indian equities

Foreign institutional investor (FII) ownership in Indian listed companies has reached new heights. In September, the FII equity asset under custody (AUC) as a percentage of the total market capitalisation of all companies listed on the Bombay Stock Exchange (BSE) hit a six-month-high. This rise is largely due to significant investments following a more cautious approach by the US Federal Reserve and its recent interest rate cut.

For the first time, the total assets under custody of FIIs across various investment vehicles, including debt, equity, alternative investment funds (AIF), mutual funds, and hybrid funds, surpassed $1 trillion.

This figure marks a 26.7% increase since the start of the year and the highest growth rate since December 2017. Specifically, the equity AUC stood at $930 billion, while debt and other investments accounted for $76.83 billion.

In 2023, the total FII assets under custody grew by 25.5%, rising from $633.56 billion in 2022 to $795.20 billion. The only years that saw a decline in total assets under custody were 2018 and 2022.

FII ownership in Indian equities has climbed 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 compared to August, when investments were only $873 million, making September the highest month for buying since December 2023, when FIIs net purchased shares worth $7.9 billion.

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

Other sectors that saw considerable interest from foreign investors included:

• Fast-Moving Consumer Goods (FMCG): Rs 4,900 crore
• Capital Goods: Rs 4,000 crore
• Consumer Durables: Rs 3,736 crore
• Telecommunications: Rs 1,935 crore
• Services: Rs 1,725 crore
• Chemicals: Rs 1,445 crore
• Power: Rs 1,409 crore
• Metals & Mining: Rs 1,155 crore
• Construction: Rs 1,095 crore

Despite these strong investments, there were some sectors where FIIs chose to sell shares. Notable sell-offs included:

• Consumer Services: Rs 2,940 crore
• Automobiles: Rs 2,106 crore
• Information Technology: Rs 1,219 crore
• Construction Materials: Rs 901 crore
• Oil & Gas: Rs 640 crore

In addition to equity investments, FIIs also invested $3.75 billion in Indian debt in September, bringing the total debt investments for 2024 to $17.09 billion. Overall, total investments across debt, equity, AIF, mutual funds, and hybrid funds have reached approximately $30.66 billion this year, surpassing last year's total of $28.70 billion.