FPIs yanked out $1.8bn from financial stocks amid global risk off

On August 5, FPIs sold shares worth Rs 10,073 crore, marking their third-largest single-day outflow, which led to a 3 per cent drop in benchmark indices

Foreign portfolio investors (FPIs) withdrew ₹14,790 crore ($1.8 billion) from financial stocks in the first half of August, driven by global risk aversion sparked by US recession fears. Additional factors contributing to the decline in banking stocks included subdued earnings growth in the June quarter, concerns about slowing deposit growth, and stricter liquidity norms imposed by the Reserve Bank of India.

In contrast, FPIs invested in safe-haven sectors, purchasing stocks in healthcare and fast-moving consumer goods (FMCG). On August 5, FPIs sold shares worth ₹10,073 crore, marking their third-largest single-day outflow, which led to a 3% drop in benchmark indices. Global markets also plummeted following disappointing US unemployment data, fuelling concerns of a recession in the world's largest economy.

The total net FPI outflow for the first fortnight of August reached ₹18,823 crore. Typically, during risk-off periods, FPIs withdraw from financial stocks, where they have the largest exposure. As of August 15, FPI allocation to financial stocks stood at 27.28%, down from 27.48% on July 31. The information technology sector had the second-highest FPI allocation at 9.33%.