FPIs Continue to Exit Indian Market, Impacting Oil, Gas, and Auto Sectors

Continued selling by Foreign Portfolio Investors (FPIs) has negatively impacted key sectors such as financial services, oil & gas, and automobiles, according to a report by the State Bank of India (SBI). October saw record outflows, with significant pressure on various sectors.

The financial services sector was hit the hardest, with FPIs pulling out Rs 23,283 crore in the first half of October. This marks a stark contrast to September, when FPIs invested Rs 27,200 crore in the same sector. The sudden shift indicates growing caution among foreign investors toward the Indian market, particularly in the financial sector.

Oil, Gas, and Auto Sectors Also Face Outflows

Other key sectors also suffered significant outflows. FPIs withdrew Rs 12,371 crore from the oil, gas, and consumable fuels sector, while the automobile and auto components sector saw Rs 8,131 crore in outflows. The auto sector has been under consistent pressure, registering FPI outflows of Rs 2,106 crore in September and Rs 2,379 crore in August, indicating a sustained bearish sentiment.

Limited FPI Inflows

Most sectors failed to attract significant FPI inflows during this period, with the exception of the chemicals sector, which saw modest inflows of Rs 552 crore, the highest among all sectors.

The Nifty Auto index has declined by about 9% from its 52-week high, while the Nifty Financial Services index is down by 5%, reflecting the market impact of FPI withdrawals.

October has recorded the highest FPI outflows in recent history, with net sales amounting to Rs 77,701 crore. This surpasses the COVID-19-induced sell-off in March 2020, when Rs 61,972.75 crore was offloaded. The continued selling by FPIs is creating volatility in these sectors, raising concerns about the overall economic outlook.