Financials, Tech Stocks See Heavy Foreign Selloff In First Half Of May

Foreign investors continued their selling spree in financial and information technology stocks during the first half of May. All sectors, with the exception of consumer services and textiles, witnessed FIIs selling during the period, with the cumulative outflow exceeding Rs 25,200 crore.

Financial services and information technology stocks witnessed outflows to the tune of Rs 9,687 crore and Rs 5,574 crore, respectively, from May 1 to May 15, according to NSDL data.

Foreign flows have been negative so far this year, with a skewed selloff in the financial space, according to ICICI Securities Ltd. Foreign inflows into domestic cyclical stocks remain strong. Financials, concentrated in a few private sector banks, drive the disproportionately high contribution to sales, ICICI Securities said in a note. "Even within finance, PSU banks witnessed buying."

US interest rates and yields are the main drivers behind the selling in BFSI and IT stocks, according to Anil Kumar Bhansali, head of Treasury and executive director at Finrex Treasury Advisors LLP.

Foreign institutions have been net sellers of Indian equities worth Rs 23,839 crore so far in 2024, according to data from the National Securities Depository Ltd., as per data till May 21.

"I do expect that once (election) results are out of the way, FPIs will come back to invest if the current government is back at the helm," Bhansali said.

From May 2 to May 16, FIIs have been net sellers every consecutive day and offloaded shares worth Rs 37,150 crore, according to the provisional data from the NSE. While domestic investors have mopped up Rs 32,400 crore during the same period,.