FIIs Continue Financial Sector Selling, Offload ₹23,141 Crore In May

Foreign institutional investors (FIIs) sold financial services shares worth ₹23,141 crore in May, following outflows of ₹30,856 crore in April and ₹60,655 crore in March. The continued selling kept financials among the weakest sectors for foreign flows during the month.

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Analysts tracking sectoral flow data point to a combination of global and domestic factors behind the trend. Higher U.S. bond yields, a stronger dollar, and investor preference for AI-linked opportunities in overseas markets have encouraged a rotation of capital away from emerging-market financial stocks. Sentiment towards Indian banking and financial services companies has also been weighed down by concerns about moderating credit growth, elevated valuations and geopolitical uncertainty.

Selling Extended Beyond Financials

The outflows were not limited to financial stocks. The oil and gas sector recorded FII selling of ₹8,978 crore in May, after ₹6,703 crore in April and ₹4,129 crore in March.

Fast-moving consumer goods (FMCG) stocks saw net selling of ₹3,561 crore during the month, while automobile stocks faced outflows of ₹2,532 crore. These sectors had also seen sustained selling in the previous two months, with FMCG outflows of ₹3,205 crore in April and ₹5,419 crore in March, and auto outflows of ₹5,479 crore and ₹12,498 crore respectively.

Consumer-focused and technology stocks also remained under pressure. FIIs sold consumer-sector shares worth ₹1,995 crore and IT shares worth ₹1,911 crore in May, although the magnitude was lower than the outflows recorded in April.

Other Sectors Also Saw Outflows

Construction materials, consumer durables, and construction stocks registered net foreign selling of ₹1,641 crore, ₹1,449 crore, and ₹1,211 crore, respectively, during the month.

The figures show that foreign investors were net sellers in several sectors of domestic demand, although the intensity of selling was lower than in previous months.

Selective buying was evident in services and in capital goods. In some sectors, there were withdrawals. The services sector was among the top foreign buying sectors in May, attracting FII inflows of ₹7,204 crore.

Net buying in capital goods stocks was ₹2,799 crore, while metals and mining witnessed modest inflows of ₹667 crore. The inflows suggest investors remained selective, with a preference for segments related to infrastructure, industrial spending and some services businesses.

The overall pattern for May showed broad-based caution from foreign investors, with financials continuing to bear the largest share of selling pressure even as the pace of outflows eased from the sharp reductions seen in March and April.