Foreign institutional investor (FII) ownership in Indian listed companies, or FII equity asset under custody (AUC), rose to a six-month high in September, owing primarily to record investments following the US Federal Reserve's dovish stance and rate cut.

FIIs' total assets under custody in debt, equities, AIF, mutual funds, and hybrid funds surpassed $1 trillion for the first time, representing a 26.7 percent gain from the start of the year and the largest increase since December 2017. The equity AUC was $930 billion, while debt and other liabilities was $76.83 billion.

In 2023, overall FII assets under custody increased by 25.5 percent, reaching $795.20 billion from $633.56 billion in 2022. Notably, FIIs' total assets under custody fell only in 2022 and 2018.

FII holding of Indian shares increased to 16.43 percent, the highest level since March 2024. In September, FIIs invested about $7 billion in Indian stocks, up sharply from $873 million in August, and the largest monthly purchase since December 2023, when FPIs net acquired shares worth $7.9 billion.

FIIs made considerable investments this month, with more than Rs 27,200 crore going into financial services, the single-largest sector allocation. Healthcare and real estate followed with Rs 6,639 crore and Rs 5,375 crore, respectively.

Other industries that attracted investment included FMCG (Rs 4,900 crore), capital goods (Rs 4,000 crore), and consumer durables (Rs 3,736 crore). Foreign investors expressed strong interest in sectors such as telecommunications (Rs 1,935 crore), services (Rs 1,725 crore), chemicals (Rs 1,445 crore), electricity (Rs 1,409 crore), metals and mining (Rs 1,155 crore), and construction (Rs 1,095 crore).

In contrast, FIIs sold shares worth Rs 2,940 crore in consumer services, Rs 2,106 crore in vehicles, and Rs 1,219 crore in information technology firms. Other industries under selling pressure included building materials (Rs 901 crore) and oil and gas (Rs 640 crore).

FIIs invested $3.75 billion in Indian debt in September, bringing the total debt investment for 2024 to $17.09 billion. Overall, investments in debt, equities, AIF, mutual funds, and hybrid funds have totaled around $30.66 billion this year, exceeding the $28.70 billion recorded last year.