Rs 1 lakh crore FII selloff in 6 sectors! Are you still holding the wrong stocks?

Foreign institutional investors have aggressively sold off nearly ₹1 lakh crore in Indian equities across six key sectors, including IT and FMCG, over the past six months.
Foreign institutional investors have aggressively sold off nearly ₹1 lakh crore in Indian equities across six key sectors, including IT and FMCG, over the past six months. This pullback reflects concerns about high valuations, global macro uncertainties, and potential earnings downgrades. Telecom and financials are notable exceptions, attracting FII inflows amidst this broad de-risking trend.
Tired of too many ads?
Remove Ads
Tired of too many ads?
Remove Ads
Valuations at Tipping Point
Earnings Under Pressure
Tired of too many ads?
Remove Ads
Where the Smart Money Is Moving
Bottom Line: What Should Investors Do?
Foreign institutional investors (FIIs) have gone on a selling spree, offloading nearly Rs 1 lakh crore worth of Indian equities in just six months across six key sectors of consumer durables FMCG , and IT . The sharp pullback, concentrated in segments once considered defensives or structural bets, underscores rising concerns around valuations, global macro uncertainty, and a shifting earnings landscape.The biggest casualty is the IT sector, which alone has seen Rs 33,479 crore in net FII outflows, or a third of total selling. This is followed by FMCG (Rs 17,819 crore), auto (Rs 16,058 crore), consumer services (Rs 14,417 crore), power (Rs 12,231 crore), and consumer durables (Rs 11,296 crore).'We continue to maintain our underweight stance in the IT sector, as we foresee a slowdown in overall IT spending in the US market and a probable delay in discretionary spending,' said Neeraj Chadawar, Head of Fundamental and Quantitative Research at Axis Securities. 'Guidance and commentary remain critical for the sector going forward.'The broad-based nature of the selling suggests a structural de-risking rather than just profit-taking. Even construction (-Rs 9,322 crore) and healthcare (-Rs 9,048 crore) have witnessed sharp outflows. In contrast, only a handful of sectors have seen net FII inflows, including telecom (Rs 23,065 crore) and financials (Rs 9,456 crore).Despite the bounce-back in domestic equities since April, foreign investors remain wary. FIIs were net sellers in four of the six months this year, including massive outflows of Rs 78,027 crore in January and Rs 34,574 crore in February. Even June, so far, has seen a net selloff of Rs 5,404 crore (till June 15).'Export-facing sectors will be in a wait-and-watch mode… domestic-facing sectors will likely lead from here,' Chadawar added, highlighting the impact of reciprocal tax measures and global macro risks.The retreat comes amid a strong equity rally that has made valuations appear frothy, particularly in mid- and small-cap segments. According to Jefferies' Chris Wood, the Nifty Midcap 100 Index now trades at 27.1x forward earnings, even as the Nifty itself is at 22.2x—well above its historical median.'Valuations have become an issue again, particularly in the mid-cap space,' Wood wrote in his GREED & fear report. 'The equivalent of $7.2 billion of equity supply was raised last month and $6 billion so far in June. It is this supply which poses the main risk to the market.'Wood noted that domestic flows and sentiment remain strong, especially in consumer finance stocks. However, FII positioning indicates growing concern about over-valuation and saturation in parts of the market.Beyond valuation, earnings downgrades and growth moderation are another red flag. HSBC, in its Q4 review, flagged weak topline performance in consumer staples and slowing credit growth in banks.'Demand for consumer staples was subdued, while competitive intensity remains high… Growth for banks moderated to a single-digit rate amid margin pressures,' the HSBC note said, adding that 'a sustained recovery in earnings growth is still a few quarters away.'The IT sector, despite posting 6% net income growth, continues to suffer from poor visibility in US demand, weak discretionary spend, and macro uncertainty in export markets. This aligns with Chadawar's view that export-oriented sectors remain underweight, pending clarity on reciprocal trade measures.Interestingly, not all foreign investors are pulling back entirely—they're simply rotating. FIIs have made significant investments in telecom (Rs 23,065 crore) and to a lesser extent in financials (Rs 9,456 crore), services (Rs 7,351 crore), and chemicals (Rs 4,863 crore).'From a long-term valuation and earnings visibility perspective, our portfolio is currently tilted towards cyclicals,' said Chirag Mehta, CIO, Quantum AMC. 'We believe the global macro challenges do not derail India's domestic cyclical recovery. Sectors like banking, consumer discretionary, materials, and utilities appear attractive.'While Mehta remains cautious on IT, he believes continued correction could create long-term entry opportunities, especially in high-quality names with consistent earnings power.Even Jefferies' GREED & fear India portfolio is shifting gears. Positions in L&T, Thermax, and Godrej Properties are being exited, replaced with TVS Motor, Home First Finance, and Manappuram Finance. Additional exposure is also being added to PolicyBazaar and Bharti Airtel, signaling a shift to consumption- and credit-focused themes.While domestic flows remain robust, the intensity and concentration of FII selling, especially in IT, FMCG, and auto, should not be ignored. With nearly ₹1 lakh crore of outflows in six months, the foreign money is clearly betting on earnings downgrades, valuation fatigue, and a global demand slowdown.'We seek out quality, high-integrity businesses at reasonable valuations… Our value-conscious approach often leads us to sectors that may be out of favour but possess strong fundamentals,' Mehta said.For investors navigating this turbulent landscape, the data suggests a clear bifurcation: domestic-oriented sectors like telecom and financials are attracting foreign capital, while export-dependent sectors face sustained selling pressure. The challenge lies in timing entry points as valuations remain elevated despite the sectoral rotation.(Data: Ritesh Presswala): Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Business Standard

30 minutes ago

• Business Standard

Private sector business activity rises to 14-month high in June: PMI data

India's private sector output grew at its fastest pace in 14 months in June, helped by faster increases in total new business intakes and international sales, showed a private survey on Monday. HSBC's flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 61, up from a downward revised figure of 59.3 in May. The index, which measures monthly change in the combined output of manufacturing and services, has been above the 50-mark that separates growth from contraction for the 47th consecutive month. 'Manufacturers led the upturn in business activity, though growth also picked up pace in the service economy. Rates of increase were at two- and ten-month highs, respectively. According to panellists, output was boosted by favourable demand trends, efficiency gains and tech investment,' said the survey. The HSBC Flash India Manufacturing PMI rose to 58.4 in June from 57.6 in May. The latest figure – a weighted average of new orders, output, employment, suppliers' delivery times and stocks of purchases indices –signalled the best improvement in operating conditions since April 2024. 'New business placed with goods producers and service providers increased at the end of the first fiscal quarter, with the faster upturn among the former. At the composite level, the rate of expansion was the strongest seen since July 2024,' said the survey. Pranjul Bhandari, chief India economist at HSBC, said the flash PMI for May indicates strong growth in June as new export orders continued to fuel private sector business activity, especially in manufacturing. 'Meanwhile, the combination of robust global demand and rising backlogs prompted manufacturers to increase hiring. Employment growth is also healthy in the services sector despite slightly weakening on a sequential basis from May to June. Finally, input and output prices continued to rise for both manufacturing and services firms, but rates of increase showed signs of softening,' added Bhandari. Flash PMI records 75 per cent to 85 per cent of the 800 responses from services and manufacturing firms each month. The final manufacturing PMI figure for June will be released on July 1, while the services and composite PMI figures will be released on July 3. 'June data showed an intensification of capacity pressures among Indian companies. Outstanding business volumes rose at a modest pace that was faster than in May and a tick above its long-run average. Moreover, the current sequence of rising backlogs was extended to three-and-a-half years. Rates of accumulation were broadly similar among manufacturing firms and their services counterparts,' the survey read. On the employment front, the survey noted that the combination of demand strength and rising backlogs prompted Indian companies to recruit additional staff in June as anecdotal evidence indicated that both full- and part-time employees were hired for permanent and temporary positions. The employment growth reached a series peak in the manufacturing industry, while service providers signalled a slower upturn in job creation than in May.

Time of India

37 minutes ago

• Time of India

Bengaluru or Hyderabad, which is better for job hunt for mid-level techies? Internet explodes with rants on pay caps and work woes after Redditor's post

A Hyderabad-based developer's post on the popular subreddit r/developersIndia has ignited a storm of responses, as job seekers from across the country weighed in on regional disparities in pay, hiring trends, and career stagnation. The original post, bluntly titled 'Hyderabad is screwed than Bangalore,' came from a professional with 11 years of experience and a total compensation of ₹65 lakh, now struggling to get callbacks from companies in Hyderabad. 'Ecosystem Is the Issue': A Tale of Two Cities The poster noted that high-paying roles in Hyderabad are limited to top-tier companies like FAANG; roles he admitted were difficult to land. 'There seems to be a limited number of mid-to-high tier product companies in Hyderabad that offer competitive pay,' he wrote. In contrast, Bengaluru appeared more responsive, even if the offers weren't ideal. Netizens Sound Off What followed was a flood of Redditors sharing similar experiences and bitter truths. One user from Ahmedabad wrote that salaries rarely go beyond 15LPA there. Another claimed their city capped compensation at 17LPA—and said a recruiter even called them 'nuts' for asking for more. Another user remarked, 'Total comp is kind of a context-specific value. I had an interview offer for 1.2cr, but most of it was in worthless paper ESOPs.' This reflected a recurring sentiment: compensation on paper often hides the reality of deferred or unstable payouts. One user shared a sobering anecdote of her husband, also from Bengaluru, who was laid off despite a 60LPA base. He struggled for six months, with companies offering significantly lower salaries, until he finally found a new job. Fortunately, a lack of EMIs meant he could hold out. You Might Also Like: 'Bengaluru is exhausted... surviving on caffeine': Startup founder reveals 'top 3 corporate concerns' shaking up the city A Broken Market or Just Misplaced Expectations? Some pointed out that the original poster's high salary bracket and experience might not reflect the average job seeker's journey. 'Your CTC and YOE are out of the curve,' one user commented. Yet many agreed that it's not just geography—it's the job market itself that's faltering. One Redditor put it succinctly: 'Bangalore companies will nod at everything during interviews. But in the end, they'll offer you the same or less, citing budget constraints.' From One Redditor's Rant to a Collective Reality What started as one developer's frustration soon became a sounding board for India's tech professionals, revealing cracks not just in geography-based hiring, but in the very fabric of job satisfaction. The Hyderabad vs Bengaluru debate is only the tip of the iceberg. What lies beneath is a deeper discomfort with how the Indian job market values time, talent, and well-being. You Might Also Like: 'I am a Kannadiga, and I am done with Bengaluru': Why this Reddit post is going viral

Economic Times

39 minutes ago

• Economic Times

Ideaforge Technology shares hit 10% upper circuit after bagging Rs 137 crores order to supply mini UAVs to MoD

Ideaforge Technology share price target Live Events About Ideaforge Technology (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Shares of Ideaforge Technology surged 10% to hit the upper circuit at Rs 631.6 on the BSE on Monday, following a major order win from the Ministry of Defence (MoD).The company announced in a stock exchange filing that it has secured an order worth approximately Rs 137 crore (all-inclusive) to supply Mini Unmanned Aerial Vehicles ( UAVs ) along with accessories to the MoD. The delivery is expected to be completed within 12 to Trendlyne, the average analyst target price for Ideaforge Technology is Rs 388, implying a potential downside of around 39% from current levels. Of the two analysts tracking the stock, the consensus rating is 'Sell'.On the technical front, the stock's Relative Strength Index (RSI) stands at 56.6, indicating neutral momentum. It continues to trade above its 20-day, 50-day, 100-day, and 200-day simple moving averages (SMAs).Year-to-date, shares have risen around 64%, though the stock is still down about 18% over the past 12 months. The company's current market capitalisation is approximately Rs 2,727 is one of India's leading manufacturers of Unmanned Aircraft Systems (UAS), catering to mapping, surveillance, and security needs across sectors such as defence, mining, and company boasts the largest operational deployment of indigenous UAVs in the country, with one drone reportedly taking off every five minutes. It has in-house capabilities for designing, engineering, and manufacturing UAVs, ensuring high performance and reliability.A pioneer in India's drone space, Ideaforge developed vertical take-off and landing (VTOL) UAVs as early as 2009, setting the stage for its strong presence in both government and commercial drone applications.: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)