Due to strong domestic valuations and volatility in the global market, foreign institutional investors (FIIs) engaged in a wave of significant selling during the first two weeks of August. However, later in the month, they turned their attention to purchasing, allocating Rs 25,000 crore across eight important sectors.
With purchases of Rs 5,297 crore, consumer durables was the sector that saw the largest inflows of foreign direct investment. Significant investments in the finance (Rs 2,782 crore), services (Rs 4,251 crore), and information technology (Rs 4,529 crore) industries came next.
It’s interesting to note that early in August, sell-offs persisted in the services and financial sectors, which had already been subject to significant selling pressure in July due to outflows of Rs 1,474 crore and Rs 7,648 crore, respectively.
FIIs withdrew an additional Rs 2,088 crore from services and Rs 14,790 crore from financials in the first half of the month, until later in the month they began to buy. The following industries benefited from FII purchases: fast-moving consumer goods (Rs 1,815 crore), healthcare (Rs 2,369 crore), consumer services (Rs 1,962 crore), and oil and gas (Rs 2,518 crore).
Even with the increase in foreign investment, FIIs continued to put pressure on specific sectors to sell. The industry with the largest outflows, exceeding Rs 2,305 crore, was the power sector. The automotive sector experienced outflows of Rs 751 crore, while the metals and mining sector followed with sell-offs of Rs 1,105 crore.
The complex dynamics influencing India’s markets are highlighted by this reversal in FII sentiment, with some sectors benefiting from new inflows while others are still under pressure due to ongoing global worries.
