Banks, financial stocks suffer Rs 15,000 crore shock from FIIs. Should you go against the wind?
financial stocks in the first fortnight of August and chose to raise exposure to defensives like healthcare, FMCG and consumer services.
As against the total buying of Rs 11,646 crore in the previous fortnight, foreigners were net sellers to the tune of Rs 18,823 crore from 1-15 August.
Besides financials, FIIs were also bearish on metals, services, construction and auto stocks. On the other hand, foreign dollars loved the safety net of healthcare (buying of Rs 3,462 crore), consumer services (Rs 2,196 crore), FMCG (Rs 1,785 crore) and power (Rs 1,169 crore).
Why did FIIs sell financial stocks?
Whenever FIIs want to reduce or raise exposure to Dalal Street, the first port of call is IT and financials as most of their money is lying in these two sectors. IT saw a small selling of less than Rs 500 crore in the fortnight as the outlook has improved while the earnings of the banking sector were a little weaker than expectations with challenges emerging on credit costs.
«FY24 was a year of low credit costs and thus the increase in credit costs from such a low base was expected. However, the slight rise in credit costs surprised the market and the sector has been witnessing de-rating post the earnings season,» said Naveen Kulkarni, CIO, Axis Securities PMS.
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In the June quarter, credit growth was softer than usual Q1 seasonality due to additional headwinds from muted deposits growth, elevated loan-to-deposit ratio and
