FIIs sell Rs 31,000 crore in financial services in first half of March

markets

• FIIs sold Rs 31,000 crore in financial services in early March
• Sensex and Nifty dropped about 8 percent since early March
• Capital goods, metals, and power saw inflows amid broad selling

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Foreign investors sold heavily in financial services stocks, with experts saying the selling was driven by a combination of geopolitical risks, rising oil prices impacting the rupee and regulatory tightening.

During the first half of March, FIIs sold over Rs 31,000 crore in financial services, compared with buying of Rs 8,400 crore in February.

Experts said key factors behind the sharp selling in banking and financial stocks include tensions in the Iran-Middle East region affecting market stability, concerns over rising bond yields impacting treasury portfolios and tighter norms by the Reserve Bank of India on capital market lending.

Overall, FIIs recorded net selling of Rs 53,700 crore in Indian markets in the first half of March, according to NSDL.

Indian markets have seen a sharp correction since the start of March due to tensions involving Iran, Israel and the US, along with rising oil prices, stretched valuations, subdued earnings growth, absence of domestically listed artificial intelligence-related firms and continued foreign institutional investor selling.

Benchmark indices Sensex and Nifty have declined about 8 percent each, while broader markets have fallen nearly 10 percent. Brokerages have cautioned that earnings estimates for fiscal year 2027 could face downside risks of 10 percent to 15 percent if oil prices remain elevated.

Other sectors such as auto, telecom and construction also saw selling pressure from foreign investors, with outflows of Rs 4,800 crore, Rs 3,856 crore and Rs 2,975 crore, respectively, during the first half of March. In comparison, auto and construction had seen inflows of Rs 3,586 crore and Rs 4,487 crore, respectively, in February, while telecom had recorded outflows of Rs 1,881 crore.

In the first half of March, oil and gas saw selling worth Rs 2,932 crore, while healthcare recorded outflows of Rs 2,436 crore. FMCG, realty and consumer durables also witnessed selling of Rs 2,403 crore, Rs 2,133 crore and Rs 1,727 crore, respectively, while construction and IT saw outflows of Rs 1,492 crore and Rs 1,263 crore.

Despite the broad-based selling, some sectors saw inflows during the first half of March, with capital goods attracting Rs 3,897 crore following inflows of Rs 12,135 crore in February, while metals and power sectors saw inflows of Rs 876 crore and Rs 602 crore, respectively.