Foreign institutional investors (FIIs) aggressively sold off Indian equities in February, continuing a trend that has put pressure on multiple sectors. According to NSDL data, FIIs offloaded Rs 34,576 crore worth of stocks, with financials witnessing the sharpest sell-off of Rs 6,991 crore, adding to January’s Rs 24,949 crore exodus. Sectors such as FMCG (Rs 6,904 crore), capital goods (Rs 4,464 crore), auto (Rs 3,969 crore), and oil & gas (Rs 3,377 crore) were also hit hard. This comes despite a consumption-focused Budget and robust domestic economic indicators, prompting questions about whether this is a temporary reallocation or a sign of deeper macroeconomic concerns.
Broad-Based Selling or Tactical Rebalancing?
Experts suggest the FII outflows could be attributed to high valuations and passive fund-driven selling. “Both the capital goods and FMCG sectors have been, and continue to be, significantly overvalued. However, while capital goods maintain a strong near- to mid-term outlook, supported by large order books, FMCG remains expensive despite increased consumption potential from Budget tax relief,” said Dr Vikas Gupta, CEO & Chief Investment Strategist at OmniScience Capital.