FII selling in banking stocks continued in February

MUMBAI: Foreign institutional investors (FIIs) continued to offload shares of financial services companies in February after January, anticipating that slowing credit demand in the country's banking sector and the struggle to secure deposits could pressure banks' margins going forward.

After selling stocks worth Rs 30,000 crore in January, foreign investors sold bank stocks worth Rs 7,536 crore in the first fortnight of the current month, the data showed.

Non-banking financial companies (NBFCs) are also under pressure as they have to rely on banks for their financial needs.

In addition to financial services sector stocks, FIIs have been selling in construction, telecom, FMCG, power, metal stocks, while net inflows have been in healthcare, IT, auto.

Foreign investors sold $3.50 billion in the Indian equities market in the current calendar year, but the market did not see much of a decline as domestic institutional investors absorbed the selling.

FIIs will soon become active in the Indian market as risks are associated with Chinese equities, an analyst said.

According to assessments, outflows from India have been seen due to weak earnings of Indian companies in the third quarter of the current financial year. Foreign investors have become wary of not seeing earnings as per valuations.

Massive selling by FIIs in Indian companies has been seen after HDFC Bank results.