Financial services, IT bear brunt of FII selling in stocks

MUMBAI:  Financial services, IT and consumer durables bore the brunt of outflows in the fortnight ended June 15, as  FIIs have been selling Indian shares hand over fist in the fiscal year to date, latest data from NSDL show.

During the fortnight, FIIs sold $1.03 bn in financial services, followed by $474 mn in the IT sector and $330 mn of consumer durables. Analysts said stocks affected by the FII selling in these sectors included Bajaj Finance, ICICI Bank and c, which fell between 8.7% and 9.6%, and Wipro, which saw a 6.6% correction. Among consumer durables, Dixon Technologies and TTK Prestige corrected 11% each during the fortnight under review.

All these companies have significant FII stakes. In June, FIIs’ total cash market sales were $6.4 bn, the highest since March 2020, when they sold a whopping $8.34 bn shares in response to the emergence of the pandemic.  In the fiscal year to date (Apr-Jul1), their sales have totted $14.24bn against sales of $18.46bn in the whole of FY22.

“The selling in IT was on overvaluation concerns while financial services were impacted by over-ownership amid the US raising interest rates to tame runaway inflation and the rupee weakening, which caused the outflows,” said Rohit Srivastava, founder IndiaCharts.

Analysts feel, that going forward the reasonable valuations this fiscal could reduce the selling intensity of FIIs. HDFC, for instance, is down nearly  27% from its record high, while Bajaj Finance has corrected 30% and Wipro by 43%. While the cash market sales of FIIs have spooked investors and the rupee, they have also been short in the equity derivatives segment.

FIIs’ cumulative net bearish positions in index futures stand at 119,715 contracts. Along with cash sales, they’ve also been shorting index futures on a net basis. This has added to the market bearishness even as domestic institutional investor buying has kept the market from falling more sharply and made India a relative outperformer to some of Asia’s leading indices.

These stocks bear brunt of FII selling in market
During the fortnight, FIIs sold $1.03 bn in financial services, followed by $474 mn in the IT sector, $330 mn of consumer durables. Analysts said stocks affected by FII selling in these sectors included Bajaj Fin, ICICI Bank, HDFC, Wipro