FIIs continue financial stock selloff, offload ₹23,141cr in May
What's the story
Foreign institutional investors (FIIs) have continued their selling spree in Indian financial services stocks for the third consecutive month. In May, they offloaded shares worth ₹23,141 crore. However, this is an improvement over April's heavy outflows of ₹30,856 crore and March's ₹60,655 crore. The trend is largely attributed to a global shift toward the US amid high bond yields and dollar strength.
Market dynamics
Factors driving FII outflows
The global shift toward the US is driven by high bond yields, a strong dollar, and the race to capture AI momentum. Concerns over slowing credit growth, stretched valuations in Indian financials, and geopolitical tensions have added to the selling pressure. High-weightage banking and financial services stocks have been major targets for profit-booking amid these market dynamics.
Sectoral impact
Other sectors witnessing FII selling
The selling trend wasn't limited to financials alone. The oil and gas sector saw FII outflows of ₹8,978 crore in May, after ₹6,703 crore in April and ₹4,129 crore in March. FMCG and auto sectors also witnessed selling worth ₹3,561 crore and ₹2,532 crore, respectively, during the month under review. Consumer durables and construction materials recorded outflows of ₹1,449 crore and ₹1,641 crore, respectively, during May.
Market resilience
Sectors attracting FII buying
Despite the broad-based selloff, some sectors managed to attract FII buying. The services sector drew investments worth ₹7,204 crore in May while capital goods attracted inflows of ₹2,799 crore. Metals and mining also saw modest net purchases of ₹667 crore during this period. These sectors provided a glimmer of hope amid an otherwise challenging market environment for investors.