FIIs Withdraw Funds in April; ₹19,150 Crore Outflows Noted in Financial Stocks Despite Market Rise

The foreign institutional investors continued to take their money out of Indian equities in April, with outflows in the financial services sector alone amounting to ₹19,150 crore for the first part of the month.

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According to data collated from the exchanges, the trend continues since a sales volume of around ₹60,000 crore was noted last month amid a rally in market benchmarks.

Outflows Highest in Financial Services Sector

The financial services sector saw the maximum outflows in the given period. This includes selling across banking and financial stocks, even as the Nifty Bank index rose 12% and the Nifty Financial Services index gained 12.5% during the same period.

Other sectors also saw continued selling. Consumer services recorded outflows of ₹5,336 crore, while healthcare stocks saw withdrawals of ₹4,481 crore in the first half of April, according to exchange data.

Broad-Based Selling Across Sectors

Selling pressure extended to multiple segments of the market. The auto sector witnessed FII outflows of ₹3,704 crore, while oil and gas stocks saw selling of ₹3,352 crore during the period.

Among consumption-linked and urban-focused sectors, FMCG stocks recorded outflows of ₹2,976 crore, telecom stocks ₹2,492 crore, and realty companies ₹1,917 crore. These sectors had also seen significant selling in March, indicating a continuation of the trend.

The technology and infrastructure sectors weren't safe either. IT stocks saw FII selling of ₹1,325 crore, while the construction and metal sectors saw outflows of ₹1,198 crore and ₹601 crore, respectively.

Markets Rise Despite Persistent Outflows

Despite sustained foreign selling, domestic equity markets posted gains in the first half of April. The BSE Sensex and Nifty 50 increased by around 8.5% each for the time period considered. Broad market indices performed better, with BSE MidCap 150 increasing 11% and BSE SmallCap 250 increasing by 13%.

These improvements in the stock market occurred in the context of improved sentiments in relation to geopolitics involving countries such as the United States, Israel, and Iran.

Divergence between Flows and Stock Market Performance Persisting

As evident from the table, there was a disparity between flows and stock market performance, where the domestic participation helped indices despite consistent FII selling in various sectors.

The outflows in financials, consumption, and industry segments demonstrate that foreign investors continue to make portfolio changes in their holdings despite increases in India's equity market in early April.