FPIs stay positive on consumption theme, increase allocation to automobiles, consumer services

The collective weight of the consumption-related sectors including automobiles, consumer durables, consumer services, FMCG, and telecommunications in the portfolios of foreign portfolio investors (FPIs) reached a record high 25.5% at the end of August 2024, according to data from NSDL. It increased by 308 basis points over the past 12 months. FPIs have invested $8.5 billion in consumption stocks during the period, forming 90% of their total investments. Year-to-date, FPIs have allocated $6.9 billion to consumption stocks, while their total inflow has been limited to $5.1 billion.

The assets under management (AUM) for consumption stocks in the FPI portfolio increased by 55% to $229 billion over the past year. Their total AUM increased by 39% to $900 billion during the period, accounting for nearly 18% of India’s total market capitalization.

Among consumption stocks, the automobiles sector has the highest weight at 7.8% in the FPI portfolio followed by FMCG at 6.2%, consumer services at 4.5%, telecommunications at 3.90%, and consumer durables at 3%. The weights of auto, consumer services, and telecommunications have reached record highs in the FPI portfolio. The weight of consumer services in FPI portfolios increased by 174 basis points over the past 12 months, the largest increase among all sectors followed by 136 basis points rise in telecommunications and 134 basis points increase in the auto weight. Historically, FMCG has been the largest sector in the FPI portfolio; however, since the beginning of 2024, the auto sector has overtaken FMCG amid margin-led earnings growth.