Non-stop selling! FII exodus crosses Rs 20,000 crore in first week of November

Foreign institutional investors (FIIs), who had sold Indian stocks worth about Rs 94,017 crore last month, continued to hit the sell button in November where the outflow was around Rs 23,398 crore in the first six trading sessions of the month.

Till Thursday, FIIs were net sellers to the tune of Rs 19,994 crore, according to NSDL data. Friday's session saw foreigners offloading another Rs 3,404 crore.

What started of as 'Buy China, Sell India' trade for FIIs, who were impressed by Chinese stimulus measures, got accelerated after sluggish Q2 earnings failed to support expensive valuations on Dalal Street.


"The FII selling trend is likely to continue in the near term till data indicates the possibility of a trend reversal. If the Q3 results and leading indicators reflect a recovery in earnings, the scenario can change with FIIs reducing selling and even turning buyers," said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Jefferies has cut FY25 earnings estimates for 63% of the 121 companies under coverage, which have reported 2QFY25 earnings results so far — the highest downgrade ratio since early 2020.

“Investors will have to wait and watch for the data. Meanwhile, investors can consider shifting some money from the overvalued mid and smallcaps to quality largecaps. This strategy will turn profitable in the medium to long run," Vijayakumar said.

In October, FIIs had sold banks and other financial stocks. These saw the highest selling of about Rs 26,139 crore. Second on their selling list was oil and gas stocks worth about Rs 21,444 crore, followed by Rs 11,582 crore sell-off in FMCG and another Rs 10,440 crore outflow recorded in the auto sector, shows NSDL data.

Also read | FIIs just sucked out Rs 26,000 crore from banks and financial stocks. More pain on the way?

Dalal Street veteran Sunil Subramaniam expects FII volatility to continue till the end of the year but says domestic fund managers are now ready to buy underperformers like banks and financial stocks.

"Domestic fund managers are sensing an opportunity and from now on even if there is further FII selling, domestic fund managers will step in," he said.

This month's FII selling has had little impact on benchmark indices amid solid buying by mutual funds-led domestic investors. But when seen from September-end peak, Sensex and Nifty are down about 7%.


Despite the sell-off, this month saw an unprecedented application of about 40-50 new FPI registrations, which are eyeing to enter the Indian market.

"All thanks to SEBI’s recent relaxation to NRIs, permitting them to participate up to 100% and announcing measures for ease of entry and operations in India," said BDO India's Manoj Purohit.

Though the FPI community had been very cautious about Indian markets in the last couple of months, shifting their allocation to other countries like China, India still stands on better footing as compared to other markets, he said.

"The major factors attributable are political certainty, long -term growth, better yields, substantial capex spending by the government and last but not the least, the central bank’s vigilant approach while announcing rate cuts to put a check on inflation," Purohit said.

Also read | FIIs likely to have lost No. 1 Dalal Street investor status to desi boys