After a wave of heavy selling in the first two weeks of August due to global market volatility and high domestic valuations, foreign institutional investors (FIIs) shifted their focus to buying later in the month, investing Rs 25,000 crore across eight key sectors.
Which Sector Leads FIIs Inflows?
Among the sectors, consumer durables received the highest FII inflows, with purchases amounting to Rs 5,297 crore. This was followed by significant investments in the information technology (Rs 4,529 crore), services (Rs 4,251 crore), and financial sectors (Rs 2,782 crore).
Interestingly, the services and financial sectors, which had experienced substantial selling pressure in July with outflows of Rs 1,474 crore and Rs 7,648 crore, respectively, continued to face sell-offs in early August.
In the first half of the month, FIIs withdrew an additional Rs 2,088 crore from services and Rs 14,790 crore from financials before turning to buying later in the month.
Which are the Other Sectors Attracting FII Attention
Other sectors benefiting from FII buying included oil & gas (Rs 2,518 crore), healthcare (Rs 2,369 crore), consumer services (Rs 1,962 crore), and fast-moving consumer goods (Rs 1,815 crore).
The Indian stock market experienced significant volatility in the early part of August, largely due to the unwinding of the Yen carry trade and concerns about a potential economic slowdown in the U.S.
However, a partial recovery occurred in the latter half of the month, supported by growing market optimism regarding a potential interest rate cut in September 2024.
Sectors Facing Continued FII Sell-Offs
Despite the positive shift in foreign investment, certain sectors remained under selling pressure from FIIs. The power sector recorded the highest outflows, with withdrawals exceeding Rs 2,305 crore. The metals & mining sector followed with sell-offs of Rs 1,105 crore, while the automobile sector saw outflows totaling Rs 751 crore.
This reversal in FII sentiment highlights the complex dynamics driving India’s markets, with certain sectors benefiting from fresh inflows while others continue to face pressure amidst ongoing global uncertainties.