Foreign portfolio investors (FPIs) have been making significant impacts on key sectors such as financial services, oil & gas, and automobiles with continued selling pressure, as per a report by the State Bank of India (SBI). The first half of October has seen substantial outflows, particularly affecting the financial services sector, with FPIs pulling out Rs 23,283 crore. This marks a stark reversal from the previous trend in September when FPIs had invested Rs 27,200 crore in the sector. The report indicates that foreign investors are taking a cautious approach towards the Indian market, especially in the financial sector.
In addition to the financial services sector, the oil, gas, and consumable fuels sector also experienced 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 in the previous months as well, reflecting a sustained bearish sentiment. Most sectors failed to attract significant FPI inflows during this period, except for the chemicals sector, which saw modest FPI inflows of Rs 552 crore, the highest among all sectors.
The Nifty auto index has been down by around 9 per cent from its 52-week high, while the Nifty Financial service index is also down by around 5 per cent. This data underscores 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 impact market sentiment and create further volatility in these key sectors. October has seen the highest FPI outflows in recent history, with foreign investors selling a net Rs 77,701 crore in equities so far this month, surpassing the COVID-19-induced sell-off of March 2020.
Overall, October has become a historic month for heavy selling pressure by FPIs in the Indian market, raising concerns about the economic outlook and market stability. The report by the SBI highlights the cautious approach adopted by foreign investors towards sectors such as financial services, oil & gas, and automobiles. The data from the report points towards a sustained bearish sentiment in the market, with most sectors struggling to attract significant FPI inflows. The impact of the continued selling pressure by foreign investors may lead to further volatility in these key sectors, affecting market sentiment in the coming months.
