Foreign Investors Sell Off Shares Worth ₹14,790 Crore in Financial Services Sector in August

Foreign investors have been on a selling spree in the Indian financial services sector, offloading shares worth a whopping ₹14,790 crore in the first half of August. This massive sell-off marks the highest selling by Foreign Portfolio Investors (FPIs) across all sectors during this period, according to data from the National Securities Depository Ltd (NSDL).

Analysts have pointed out that the BFSI (Banking, Financial Services, and Insurance) sector is where FPIs have the highest exposure, making it vulnerable to such sell-offs. “Some banks had merger related issues and benchmark weight changes that could have been the reason for reducing exposure,” said UR Bhat, co-founder of Alphaniti. He also mentioned that RBI’s caution on unsecured lending and promises of loan waivers by political parties may have influenced the sell decisions.

The Bank Nifty index has slipped 3.05% in the last month, while the broader Nifty index has moved up 1.06% during the same period. From January to July, foreign investors had already pulled out ₹52,924 crore from financial services shares.

Apart from the financial services sector, FPIs also offloaded shares in metals & mining, services, construction materials, automobiles, oil & gas, and capital goods sectors in August. While some of these sectors had witnessed inflows in July, they saw outflows in August, indicating a shift in investor sentiment.

Overall, overseas investors bought Indian equities worth ₹9,819 crore across eight sectors in the first half of August. The volatile market conditions and global economic uncertainties seem to be driving foreign investors to reevaluate their investment strategies in the Indian market.