As a result, the total net sell-off by FIIs in the month comes to about Rs 16,304 crore, according to NSDL data.
“The logic behind this divergent trend of selling through the exchange and buying through the primary market is the difference in valuations i.e, lower valuations in the primary market and high valuations in the secondary market,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
In the first fortnight of the month, FIIs pulled out Rs 14,790 crore from financial stocks and were also bearish on metals, services, construction and auto stocks.
On the other hand, FIIs were seen buying healthcare (Rs 3,462 crore), consumer services (Rs 2,196 crore), FMCG (Rs 1,785 crore) and power (Rs 1,169 crore).”FIIs are selling banking shares due to concerns over slow deposit growth. There are also challenges in Q1FY25 for banks with shrinking margins, deteriorating asset quality, and rising provisions, especially in credit cards, personal loans, and agriculture portfolios,” Vipul Bhowar, Director Listed Investments, Waterfield Advisors.The selling in metals and mining stocks was seen after the Supreme Court allowed states to levy taxes and royalties on minerals, leading to a rise in operating costs for miners. Auto stocks have performed well in the past few quarters, prompting some profit booking or rebalancing, Bhowar said.Going ahead, analysts expect some interest from FIIs once again after the Jackson Hole speech of US Fed chief Jerome Powell in which he signalled that rate cuts would likely align with consensus expectations, and the possibility of higher rate cuts may be lower.
The rate-cutting cycle will begin in September and this will provide further resilience to stock markets globally, analysts said.
“Overall, the regime of high interest rates is coming to a close, but the likelihood of returning to an ultra-low interest rate environment also appears to be low at the moment,” Naveen Kulkarni, Chief Investment Officer at Axis Securities PMS, said.
