FPI Sell-off: Financials, Oil & Gas, Auto sectors lead October FPI exodus amid shift to cheaper markets

Indian stock market faced a sharp correction in October, driven by sustained selling from Foreign Portfolio Investors (FPIs), who shifted to more attractively valued markets like China amid weaker domestic corporate earnings.

According to data from the National Securities Depository Ltd (NSDL), FPIs recorded net sales of ₹94,017 crore in Indian equities in October 2024, following substantial inflows of ₹57,724 crore in September. This marked a record monthly FPI sell-off, predominantly in the financials, oil & gas, and consumer sectors.

Interestingly, FPIs were net buyers in the primary market, investing ₹19,842 crore in October.

“It is important to understand that the primary market issues are mostly at fair valuations whereas the benchmark indices are trading at elevated valuations. This explains the duality in FPI behaviour. In view of the elevated valuations in India, FPIs may continue to sell thereby putting a cap on any possible up move in the market,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Here’s a look at the sectors that FPIs sold and bought the most during the month of October 2024:

Top Sectors with FPI Outflows

The Financial Services sector saw the highest FPI outflow of ₹26,139 crore in October, with ₹23,274 crore sold in the first half of the month and ₹2,865 crore in the latter half. This contrasts sharply with September, when FPIs invested ₹27,200 crore in financial services after outflows in August and July.

“Despite the massive FPI selling in financials, this sector is resilient since the valuations are fair and every selling is being absorbed by Domestic Institutional Investors (DIIs) and individual investors, particularly HNIs,” Vijayakumar said.

FPIs pulled out ₹21,444 crore from the Oil, Gas & Consumable Fuels sector, followed by the Fast-Moving Consumer Goods (FMCG) sector with significant outflows of ₹11,582 crore.

Automobile and Auto Components sector saw FPI selling of ₹10,440 crore in October, continuing a trend of outflows seen in previous months.

Also Read: Persistent FII selling to keep markets on edge

FPIs withdrew ₹8,863 crore from the Consumer Services sector, while additional outflows ranged between ₹2,600 crore and ₹3,400 crore in sectors such as Construction Materials, Information Technology, Consumer Durables, and Capital Goods. Power and Realty sectors also saw FPI selling exceeding ₹1,000 crore.

Healthcare sector saw renewed buying interest by FPIs, with inflows of ₹2,321 crore in the second half of October, offsetting earlier outflows of ₹2,376 crore in the first half.

What are FPIs buying?

Minor FPI buying activity was observed in the Chemicals sector, with inflows totaling ₹583 crore in October. Additionally, the Utilities and Metals & Mining sectors saw FPI inflows of ₹292 crore and ₹147 crore, respectively.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.