Analysts said banks tend to be the most affected in the event of foreign fund selling in India because the sector has the highest weightage in the benchmark indices – the Nifty and Sensex. In the past two weeks, foreign fund managers have sold Indian shares worth ₹11,000 crore amid heightened a risk-off sentiment globally.
FPIs, which sold IT shares worth ₹71,357 crore last year, extended their selling spree to the new year, dumping shares worth ₹3,457 crore between January 1 and 15 amid global uncertainty and margin pressure. Many analysts have trimmed their FY23 and FY24 earnings estimates of IT companies in the past few months due to a slowdown in the US and Europe on account of higher interest rates.
Foreign fund managers also sold oil & gas stocks worth ₹2,824 crore in the first fortnight of January.
These investors bought metal shares worth ₹2,518 crore between January 1 and 15, amid a correction in the dollar index, which supports the short-term bullish trend in the sector.
“In the last few months, steel prices have more or less stabilised while China has reduced Covid curbs and expectation of a rebound in the Chinese economy led to positive sentiment on metal demand recovery globally,” said Mitul Shah, head of research at
Securities. “Correction in raw material prices and falling coal prices would support margins of the metal companies going forward while the second half of FY23 would be healthy for them due to a pick-up in domestic infrastructure activities post monsoon.”
