Foreign portfolio investors (FPIs) have significantly impacted key sectors such as financial services, oil & gas, and automobiles with continued selling pressure, according to a report by the State Bank of India (SBI).
The first half of October saw considerable outflows, highlighting a sharp reversal from previous trends.
“The Financial Services sector experienced the highest FPI outflows amounting to Rs 23,283 crore. This marks a stark reversal from September, when FPIs invested Rs 27,200 crore in the financial services sector” the report noted
The change indicates that foreign investors are adopting a cautious approach toward the Indian market, particularly in the financial sector.
The oil, gas, and consumable fuels sector also suffered significant outflows, with FPIs withdrawing Rs 12,371 crore. Similarly, the automobile and auto components sector witnessed selling pressure, with outflows amounting to Rs 8,131 crore in October.
The auto sector has been under consistent pressure, registering outflows of Rs 2,106 crore in September and Rs 2,379 crore in August, reflecting a sustained bearish sentiment.
The report highlighted that most sectors failed to attract significant FPI inflows during this period. One exception was the chemicals sector, which saw modest FPI inflows of Rs 552 crore, the highest among all sectors.
The Nifty auto index is down by around 9 per cent from its 52 week high, while Nifty Financial service also down by around 5 per cent.
This data highlights the growing concern among foreign investors regarding the current economic outlook, particularly in sectors sensitive to global market fluctuations. The continued selling by FPIs may affect market sentiment and create further volatility in these key sectors.
October has recorded the highest FPI outflows in recent history. So far this month, foreign investors have sold a net Rs 77,701 crore in equities, surpassing the COVID-19-induced sell-off of March 2020, when Rs 61,972.75 crore was offloaded.
This makes October a historic month for heavy selling pressure by FPIs.
