FPIs dump Rs 22,789 crore in August, financials and IT hit hard

Mumbai: Financial services continued to bear the brunt of foreign selling in August, with overseas investors offloading ₹9,817 crore worth of shares in the second half after dumping ₹13,471 crore earlier in the month, NSDL data show.

Overall, foreign investors sold ₹22,789 crore across 12 sectors in the latter half of August. Cumulatively, July and August saw over ₹80,000 crore pulled from Indian equities.

"BFSI stocks are seeing outflows given the margin compression due to the interest rate cut but the sentiment could improve as the loan book is strong," said Bhavik Joshi, business head at INVasset PMS. "The same cannot be said about IT stocks though."

IT stocks too faced sustained pressure, with FPIs offloading ₹4,905 crore in the latter half of August after dumping over ₹6,000 crore in the first half.

"The sector has seen only a modest rebound from support levels, with no follow-through buying to confirm strength," said Sudeep Shah, vice-president and head of technical and derivative research at SBI Securities.

While a stronger dollar offers some cushion, uncertainty around the US–India trade deal continues to weigh on sentiment.”

Beyond financials and IT, oil & gas, power, and consumer services also witnessed sharp outflows in the second fortnight of the month. Foreign investors offloaded shares worth Rs 2,017 crore in the oil & gas sector, after selling worth over Rs 4,000 crore in the sector in the first half amid cautious sentiment on account of punitive tariffs on India for purchase of crude oil from Russia.

“The weakness in the oil & gas index is largely attributed to Reliance Industries, the sector heavyweight, which now trades below its 200 DEMA support zone of 1360–1380,” said Shah.

“Unless Reliance stages a meaningful recovery, the sector could remain under pressure.” Telecom valuations seem to appear attractive compared to sectors like IT and Financials, said Shah.

FOREIGN INVESTOR PURCHASES
Foreign investors turned net buyers in select pockets, led by automobiles, services, and chemicals, with smaller inflows into construction materials, capital goods and healthcare. The automobiles sector witnessed the highest foreign inflows as these investors bought shares worth Rs 2,617 crore after selling Rs 3,584 crore in July.

Between January and July, global investors offloaded shares worth Rs 14,622 crore in the sector.

“The GST 2.0 reforms indicate that the government is focusing on the consumption which could lead to interest in FMCG and auto stocks,” said Joshi.