Foreign Institutional Investors Offload $30 Billion in Financial Stocks in January

According to a report from JM Financial (NS:JMSH) Institutional Securities, Foreign Institutional Investors (FIIs) engaged in substantial selling activities during January 2024, offloading financial stocks worth a staggering $30 billion. Conversely, the IT sector witnessed significant buying, with FIIs pouring in $4.5 billion.

Breaking down the sector-wise selling trend for FIIs in January 2024, the report reveals that financials bore the brunt of the selling spree, followed by FMCG stocks totaling $2.7 billion. On the flip side, FIIs showed strong interest in the IT sector, making notable investments amounting to $4.5 billion. Even on a year-to-date basis, FIIs remained net sellers in financial stocks.

However, there was a positive shift in FII flows in February 2024, primarily driven by the Debt segment. Looking at the fiscal year-to-date basis (April-January 2024), FIIs turned negative on financials and metals, while witnessing positive inflows in capital goods and IT sectors. The positive flows in the debt segment were in line with expectations, attributed to the inclusion of domestic bonds in the JPM index.

Over the last four months, FII flows totaled $7.8 billion, marking a significant turnaround from the outflows of $94 million witnessed in FY23.

Meanwhile, mutual fund flows continued to display strength in the Mid and Small cap segments, with Large cap schemes attracting the highest inflows of Rs 12.9 billion in January 2024.

Despite expectations favoring Large cap schemes over Small and Mid cap ones, the flow of funds into the SMID category remained robust. Monthly Systematic Investment Plan (SIP) flows continued their upward trajectory, reaching Rs 188 billion. The report anticipates total SIP flows to reach Rs 1.9 trillion during FY24, compared to Rs 1.6 trillion in FY23.