Banking stocks tend to underperform during heavy selling by FPIs: Report

Foreign portfolio investor (FPI) flows have considerable influence on the performance of banking stocks. An analysis by domestic brokerage Motilal Oswal Securities (MOSL) shows the Nifty Bank Index — a gauge for the performance of banking stocks — tends to underperform the benchmark Nifty during months of heavy selling by overseas funds.

In November, the Nifty fell nearly 4 per cent, while the Nifty Bank Index dropped 8.7 per cent amid an $800-million pull-out by FPIs. Motilal Oswal has analysed the 10 biggest months in terms of FPI selling. It was observed that the Nifty Bank Index underperformed the Nifty on