Data from the National Securities Depository (NSDL) shows that in the first half of August, foreign portfolio investors (FPIs) sold shares worth $1.76 billion of financial services businesses, marking the largest outflow from the industry since January.
With $2.24 billion in total sales, the financial services industry accounted for over 78% of all net outflows during the period. Metals, building material manufacturers, and service providers all saw a decline in value in addition to financial services.
Fears of a possible US recession led to the selling, which was observed in worldwide shares. August has seen a 1.6% decline in the Bankex and a 1% decline in the benchmark Sensex. FPI inflows of $2.04 billion have made them net purchasers in India thus far in 2024. However, there have been $8.12 billion in withdrawals from the financial services industry.
Experts stated that dissatisfaction over HDFC Bank’s MSCI weight increase in two tranches and lower-than-expected June quarter earnings were further factors contributing to the sector’s withdrawals, in addition to worries about the global macroeconomic environment.
While margins should bottom out, banks must monitor an increase in loan costs, according to Nuvama. Nonetheless, many think that bank stocks should start doing better when the rate-cutting cycle gets underway.
Defensive industries including fast-moving consumer goods (FMCG) and healthcare experienced inflows from FPIs, while financial services and commodity businesses saw outflows. $213 million and $412 million, respectively, were invested by FPIs in the FMCG and healthcare sectors.
