Increased tariff strife sparks Rs 60,000 crore FII selloff in 40 days; focus on technology and banking sectors, wondering about the future prospects.
In the past month, Foreign Institutional Investors (FIIs) have been net sellers, offloading equities worth over Rs 61,000 crore, with the banking, financial services, and insurance (BFSI) sector and IT services bearing the brunt of the selling [1][2].
JM Financial's analysis reveals that BFSI and IT services were the top sectors where FIIs significantly reduced their holdings in July. Despite these sectors being among the top 5 where FIIs held the largest equity exposures, they turned net sellers in these two sectors [1][2].
The BFSI sector, which accounted for 31.6% of FII equity assets, saw an outflow of $671 million in July. Meanwhile, the IT sector experienced the largest FII outflows, totalling nearly $2,285 million [1][2].
Other sectors with substantial FII equity holdings, such as oil & gas, auto, and pharma, showed mixed trends. While the auto and pharma sectors saw marginal increases, the oil & gas sector faced a decline [1].
On the contrary, some sectors like metals, services, FMCG, telecom, and chemicals experienced modest FII buying inflows [1].
The India-US trade stalemate continues, with exports worth $87 billion at stake. Despite this, Commerce Minister Piyush Goyal has stated that India won't bow to pressure after Trump's 50% tariff hike.
The dollar has been on a downtrend, with the Dollar Index hovering around the 97-98 mark in the last few months. In July, FIIs were net sellers to the tune of $2.9 billion, while the Nifty fell 3% MoM.
The selling trend by FIIs in specific sectors continues from July into August, with Foreign institutional investors (FIIs) having been net sellers for August, with outflows in the cash market exceeding Rs 14,000 crore.
According to Sonthalia, tariffs for India may come down to rates similar to those other countries are paying in the next three or four months.
[1] JM Financial Study on FII Sectoral Holdings, July 2025 [2] JM Financial Study on FII Sectoral Holdings, August 2025
- Despite the significant selling of equities by Foreign Institutional Investors (FIIs) in sectors like BFSI and IT services, some sectors like metals, services, FMCG, telecom, and chemicals experienced modest FII buying inflows [1].
- The India-US trade stalemate continues, with the BFSI sector, which accounted for 31.6% of FII equity assets, still facing FII outflows, even though the IT sector experienced the largest FII outflows in July [1][2].
- Investors looking for alternative investment opportunities might consider Defi, stocks, or investments in sectors that have shown positive trends, such as metals, services, FMCG, telecom, and chemicals, despite the overall negative sentiment in the market [1][2].
- The Augunst JM Financial Study on FII Sectoral Holdings indicates that the selling trend by FIIs in specific sectors, such as BFSI and IT services, has persisted from July into August, with total outflows exceeding Rs 14,000 crore [2].
