Financials, information technology (IT), and energy stocks accounted for 80 percent of the ₹20,000-crore plus selloff by foreign portfolio investors (FPIs) during the last fortnight of September, a report by Business Standard stated.
The report noted that overseas funds dumped ₹7,008 crore worth of shares of companies in the financial services sector, while IT stocks worth ₹5,201 crore were sold, according to data collated by primeinfobase.com.
The selling dragged the BSE Financial Services index by 4.7 percent in the last two weeks of September, it added.
It is important to note that FPIs have the highest sectoral allocation to financial stocks, at 31.64 percent. Analysts told the market daily that the rise in inflation and yields is negative for finance companies as they have to keep higher provisions for their mark-to-market bonds which could eat into their profits.
It further informed that FPI allocation towards oil, gas & consumables declined to 11.15 percent from 11.95 percent, at the end of August while the allocation to IT stocks fell to 10.32 percent from 10.67 percent, in the same period. The sell-off in IT stocks comes amid downgrades by several brokerages citing global uncertainty and margin pressures, said BS.
Meanwhile, during the second half of September, FPIs bought telecom shares worth ₹1,634 crore, followed by consumer services stocks worth ₹978 crore and fast-moving consumer goods or FMCGs worth ₹768 crore, the report revealed.
Analysts pointed out that the FPIs prefer telecom stocks as they are unaffected by global headwinds. Moreover, the sector is consolidated in the hands of a few players which gives them more leeway in terms of passing price pressures, they added.
FMCG stocks are considered defensive bets whenever there is global financial turmoil. Even during the Lehman crisis, the fall in FMCG stocks was minimal, compared to others, analysts said. The BSE FMCG index rose 2.5 percent in the second fortnight of September.