Foreign institutional investors (FIIs) continued to reduce their exposure to Indian financial services stocks in May, selling shares worth Rs 23,141 crore. However, the pace of outflows moderated compared with Rs 30,856 crore in April and Rs 60,655 crore in March.
Market experts attributed the continued selling to a global shift of capital towards the United States, driven by elevated US bond yields, a stronger dollar and growing investor interest in artificial intelligence-related opportunities in global markets.
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Concerns over slowing credit growth, relatively high valuations in Indian financial stocks and geopolitical uncertainties have further weighed on sentiment. High-weightage banking and financial services stocks have emerged as key targets for profit booking by foreign investors.
RBI Policy Decision, US-Iran Developments To Guide Markets Next Week, Investors Also Watching Crude Oil & FII FlowsSelling Extends Across Multiple Sectors
The selling pressure was not limited to financial services. The oil and gas sector recorded FII outflows of Rs 8,978 crore in May, following outflows of Rs 6,703 crore in April and Rs 4,129 crore in March.
The FMCG and automobile sectors also witnessed continued selling, with FIIs withdrawing Rs 3,561 crore and Rs 2,532 crore, respectively, during May. This compares with outflows of Rs 3,205 crore and Rs 5,479 crore in April, and Rs 5,419 crore and Rs 12,498 crore in March.
Consumer and information technology stocks saw FII selling of Rs 1,995 crore and Rs 1,911 crore, respectively, in May, compared with Rs 7,770 crore and Rs 4,212 crore in April.
Construction materials, consumer durables and construction sectors also recorded net outflows of Rs 1,641 crore, Rs 1,449 crore and Rs 1,211 crore, respectively, during the month.
Foreign Investors Stay Cautious On Indian Equities, FPI Outflows Cross ₹2 Lakh Crore In 2026 Amid Global UncertaintyServices and Capital Goods Attract Inflows
Despite the broad-based selling, some sectors remained attractive to foreign investors. The services sector recorded net FII inflows of Rs 7,204 crore in May, while capital goods attracted investments worth Rs 2,799 crore.
Metals and mining also saw modest net inflows of Rs 667 crore, providing pockets of resilience amid the wider market sell-off.
