FPI Trends Decoded: Where Foreign Money Is Moving in Indian Markets

Foreign Portfolio Investors (FPIs) are reshaping sectoral trends in Indian equities through sharp reallocation of capital. In November, foreign investors sold around Rs. 2,722 crore worth of FMCG stocks, while simultaneously deploying nearly Rs. 4,913 crore into the telecom space, triggering noticeable divergence in sector performance. This aggressive churn highlights a clear rotation theme playing out in late 2025.

FPIs are among the most influential drivers of market direction. Their investment decisions often set the tone for medium-term trends, as they hold sizeable stakes across frontline sectors. While headline numbers suggest heavy selling, the broader picture is not one of exit from India, but of selective rebalancing across sectors based on valuations, earnings visibility and policy outlook.

So far in 2025, FPIs have withdrawn more than Rs. 1.55 lakh crore from Indian equities. However, this outflow has not been uniform. Capital has steadily moved out of certain expensive or slower-growing segments, while flowing into areas offering better risk-reward dynamics.

1. The New Rotation Pattern: Telecom In, FMCG Out

Recent shareholding data points to a decisive preference for telecom and energy, while FMCG and financials have faced sustained selling pressure.

Telecom
FPI buying: Rs. 4,913 crore
Drivers include recent tariff hikes, improving ARPU, and a stable industry structure dominated by a few strong players. This has improved earnings visibility and strengthened long-term outlook.

Oil & Gas
FPI buying: Rs. 4,177 crore
Attractive valuations, healthy refining margins and improving cash flows in large integrated players and PSUs have made the sector appealing to global investors.

FMCG
FPI selling: Rs. 2,722 crore
High valuation multiples and slower rural demand recovery have led FPIs to pare exposure in expensive defensive stocks.

Financials
FPI selling: Rs. 1,137 crore
Private sector banks and large lenders are among the most FPI-owned stocks. During periods of fund withdrawal, these stocks often become the primary source of liquidity for foreign investors.

2. Why Foreign Investors Matter So Much

FPIs hold significant ownership in India’s largest banks, IT majors and consumer companies. Even a marginal reduction in their stake can translate into selling worth thousands of crores, exerting far greater price impact than routine quarterly earnings.

A classic example is large private banks, where consistent profitability has not always translated into stock performance due to persistent FPI trimming. Historically, there has been a strong correlation between FPI flows and benchmark indices. Sustained foreign buying generally supports uptrends, while prolonged selling often results in sideways or corrective phases.

3. How This Impacts Your Portfolio

When FPIs sell a sector aggressively:

• Stock prices tend to remain range-bound for extended periods

• Volatility increases, especially on results and global cues

• Even fundamentally strong companies may underperform

This explains why several FMCG stocks have struggled to deliver returns despite stable earnings.

When FPIs accumulate a sector:

• Rallies are usually broader and longer-lasting

• Corrections tend to be shallow

• Mid-cap stocks within the sector often outperform

Telecom and energy stocks are currently reflecting these characteristics.

4. What Retail Investors Should Do Now

A few practical takeaways for investors:

• Track DII participation: If domestic institutions are absorbing FPI selling, downside risk often reduces. This dynamic helped stabilise PSU banks during earlier correction phases.

• Avoid chasing sectors under heavy FPI exit: Continuous foreign selling over multiple quarters usually caps upside. Waiting for selling pressure to ease improves risk-reward.

• Focus on sector trends, not just stock stories: Sector-level flows often overpower company-specific fundamentals in the short to medium term.

Understanding FPI rotation can help investors align portfolios with prevailing market currents, avoid prolonged underperformance, and position for sectors where sustained institutional support is building.