FIIs Continue to Sell Indian Equities in March, But Signs of Slowdown Emerge

Despite early signs of recovery in the Indian stock market, foreign institutional investors (FIIs) have continued their selling spree in the first half of March. However, market analysts believe that the intensity of this sell-off is showing signs of easing, offering a glimmer of hope for domestic investors. With potential support from the U.S. Federal Reserve, some experts suggest that the outflow trend could even reverse in the coming weeks.

Much like the previous month, the sell-off between March 1 and March 15 impacted nearly all sectors, barring metals. Interestingly, metal stocks emerged as an exception, attracting Rs 1,100 crore in investments, making them the only sector to defy the broader market trend. This stands in contrast to the previous period when metals, too, faced selling pressure.

Among the worst-hit sectors were IT, FMCG, Auto, Financials, and Healthcare, with FIIs withdrawing approximately Rs 19,000 crore ($2.2 billion) from these segments. The total outflows from Indian equities during this period stood at a staggering Rs 30,015 crore ($3.5 billion).

IT stocks bore the brunt of the sell-off, witnessing capital outflows of Rs 6,934 crore. This has significantly impacted the performance of tech companies, with the Nifty IT index plunging nearly 10% in the past month.

While the continued FII outflows remain a concern, the slowdown in the pace of selling and renewed interest in specific sectors suggest that the market may be inching towards stability. Investors now await further cues from global economic trends and central bank policies to gauge the direction of market movements in the coming months.