Power, financial services stocks witness highest FPI selling in September

September proved to be a month of contradictions, as the markets experienced an uninterrupted rise during the first fortnight, only to reverse most of the gains during the second.

The market decline in the latter part of the month was triggered by intense selling from foreign portfolio investors (FPIs), who were spooked by rising bond yields following the US Federal Reserve’s higher-for-longer narrative.

An analysis conducted by PRIME Infobase reveals the sectors where overseas funds turned the most bearish. Stocks in the power, financial services, and oil, gas, and consumable fuels sectors saw the highest sell-off, with FPIs redeeming over Rs 11,000 crore worth of investments from these three sectors alone.

Construction and fast-moving consumer goods stocks were the other major sectors affected by FPI selling.

Following the sell-off, FPI allocation to the financial services sector declined from 33.23 per cent to 32.8 per cent during the fortnight ending on September 30.

Allocations to information technology and oil stocks also fell to 9.87 per cent (from 10.04 per cent) and 8.53 per cent (from 8.68 per cent), respectively.

On the other hand, stocks in capital goods, consumer services, and automotive (including automobile component) experienced positive flows from overseas investors despite the bearish market conditions.

Telecommunication stocks piqued FPI interest, helping the sector outperform most others during the last fortnight of September.