Global funds’ assets under custody (AUC) in India have been flat this year, with a Rs 2 trillion drop in information technology (IT) holdings offset by gains in financial stocks.
Illustration: Uttam Ghosh
AUC is the total market value of equities held by FPIs.
The AUC of the IT pack stood at Rs 5.3 trillion as of July end: A 27.2 per cent decline compared to Rs 7.3 trillion at the end of 2024, according to data from NSDL.
The plunge in holdings follows a Rs 50,000 crore selloff by foreign portfolio investors (FPIs) this year amid a muted outlook for the IT sector.
The Nifty IT index has fallen 18 per cent this year, the worst among key sectors. Nifty has risen by 6 per cent.
The fall in the asset value of global funds can be a result of a selloff by global investors, currency depreciation and a fall in asset prices.
The decline in AUC of IT stocks is largely due to selling by FPIs rather than mark-to-market value erosion, said G Chokkalingam, founder of Equinomics Research.
“The price fall in recent months has not been significant enough to explain the drop, so it is more to do with actual selling.”
Sandip Agarwal, fund manager at Sowilo Investment Managers, said largecap IT companies such as Tata Consultancy Services, Infosys and HCLTech are struggling to generate annual revenue growth of more than 3 per cent to 7 per cent as their stocks trade at 15-25 times forward earnings.
Increasing wage costs and the impact of artificial intelligence are further eroding the sector’s growth potential, Agarwal said.
IT stocks have a higher weight and are more liquid, so selling is naturally more aggressive, he added.
Apart from IT stocks, value of FPI holdings in consumer durable firms fell 13 per cent to Rs 2.18 trillion, while realty’s value fell 18 per cent to Rs 1.7 trillion.
Financial stocks offset impact
Meanwhile, FPI holdings in financial services stocks rose 11 per cent (Rs 2.27 trillion) to Rs 22.7 trillion as of July end.
Overall FPI AUC saw a slight increase of 1 per cent from December 2024 to Rs 71.9 trillion in July 2025.
FPIs favour financial services as the sector promises 9-10 per cent lending growth, benefits from a likely downtrend in interest rates, and is driven by domestic demand, Chokkalingam said.
Attractive valuations, with banks and financial firms trading at relatively low price-to-book multiples, add to its appeal, he said.
