FII outflows cross ₹23,000 crore in November first week
What's the story
Foreign institutional investors (FIIs) have extended their selling spree into November, with outflows amounting to around ₹23,398 crore in the first six trading sessions of the month.
This comes after a massive sell-off last month when FIIs offloaded Indian stocks worth about ₹94,017 crore.
The trend started as a 'Buy China, Sell India' strategy due to attractive Chinese stimulus measures, but has been worsened by disappointing Q2 earnings and high valuations on Dalal Street.
Market trend
Future FII trends hinge on Q3 results
The FII sell-off has continued with net sales hitting ₹19,994 crore till Thursday, and another ₹3,404 crore offloaded on Friday.VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, predicts that the FII selling trend is likely to continue until data indicates a possible trend reversal.
"If the Q3 results and leading indicators reflect a recovery in earnings, the scenario can change with FIIs reducing selling and even turning buyers," he said.
Earnings downgrade
Jefferies downgrades FY25 earnings estimates
Jefferies has cut FY25 earnings estimates for 63% of the 121 companies it tracks that have released their Q2FY25 earnings results so far. This is the highest downgrade ratio since early 2020.
In light of this trend, Vijayakumar recommends investors to consider shifting some money from overvalued mid and small caps to quality large caps for possible medium to long-term gains.
Stock sell-off
FIIs offload bank, financial stocks in October
In October, FIIs mostly sold bank and other financial stocks, which accounted for the highest selling of about ₹26,139 crore.
Oil and gas stocks followed next on their selling list with nearly ₹21,444 crore offloaded.
This was followed by a sell-off in FMCG worth around ₹11,582 crore and an outflow recorded in the auto sector of about ₹10,440 crore.
Market strategy
Domestic fund managers eye underperforming stocks
Despite the FII volatility likely to continue till year-end, domestic fund managers are ready to invest in underperforming sectors such as banks and financial stocks.
"Domestic fund managers are sensing an opportunity and from now on even if there is further FII selling, domestic fund managers will step in," said Dalal Street veteran Sunil Subramaniam.
This shift shows a change in investment strategies amid ongoing market fluctuations.