FPI Exodus: October Marks Historic Outflows in Key Sectors

Foreign portfolio investors (FPIs) have pulled out substantial funds from Indian sectors, including financial services and automobiles, reversing prior trends. October witnessed significant outflows, highlighting growing investor caution amidst economic uncertainties.

Foreign portfolio investors (FPIs) have exerted significant selling pressure on crucial sectors such as financial services, oil & gas, and automobiles, as revealed by a State Bank of India (SBI) report. The first half of October experienced considerable outflows, marking a sharp departure from previous positive trends.

The financial services sector bore the brunt, with FPIs withdrawing Rs 23,283 crore within the first 15 days of October. This stands in stark contrast to September's trend, where FPIs invested Rs 27,200 crore in the sector, indicating a dramatic shift in investor behavior.

The trend suggests a cautious stance by foreign investors towards the Indian financial market. Similar outflows were observed in the oil, gas, and consumable fuels sector, losing Rs 12,371 crore, while the automobile sector saw withdrawals of Rs 8,131 crore.

The auto industry has been under ongoing pressure, reflecting persistent bearish sentiment with outflows over the past few months, including Rs 2,106 crore in September and Rs 2,379 crore in August. During this period, most sectors struggled to attract significant FPI inflows, except for the chemicals sector, which managed to secure Rs 552 crore, the highest among all sectors.

The downward trend is evident with the Nifty auto index down by 9% from its 52-week high, and the Nifty Financial Services index falling by about 5%. This data underscores growing foreign investor concerns over economic stability, notably in sectors vulnerable to global market shifts.

October has become historic with the highest recorded FPI outflows in recent years. To date, foreign investors have offloaded a net Rs 77,701 crore in equities for the month, surpassing the previous record set during the COVID-19 outbreak in March 2020, when Rs 61,972.75 crore was sold off.

(With inputs from agencies.)