Foreign Portfolio Investors (FPIs) intensified their selling pressure in Indian equity markets during the second half of December, offloading shares worth ₹16,848 crores across 15 sectors. The selling spree particularly targeted FMCG and financial services sectors, while information technology emerged as the sole bright spot with significant inflows.

Sectoral Selling Breakdown

FMCG bore the maximum brunt of foreign selling, with overseas investors dumping shares worth ₹4,425 crores in the latter half of December. This followed an earlier selloff of ₹1,419 crores in the first half of the month. The sector has faced consistent foreign outflows, with investors offloading ₹30,942 crores between January and November.

Financial services witnessed foreign selling worth ₹4,009 crores in the second half of December, pushing total foreign outflows in the sector to over ₹10,000 crores for the entire month. The automobile sector also faced significant selling pressure with outflows of ₹2,656 crores during the same period.

IT Sector Attracts Inflows

Contrary to the broader selling trend, the information technology sector received the highest foreign inflows worth ₹4,457 crores in the latter half of December. This marked the first fortnight of inflows for the sector after June, providing relief after overseas investors had withdrawn almost ₹76,000 crores from IT stocks between January and November.

Market Expert Analysis

Market analysts attribute the sectoral selling patterns to specific fundamental concerns. Pankaj Pandey, head of retail research at ICICI Direct, noted that the FMCG sector does not appear attractive to global investors due to limited high growth expectations and elevated valuations. For financial services, experts suggest the selling could be a reaction to margin recovery being pushed to the next quarter following RBI's interest rate cut in December.

Broader Investment Context

The December selling activity adds to the sustained foreign outflows witnessed throughout the year. In the first half of December alone, foreign investors had dumped shares worth ₹23,561 crores across 18 sectors. Despite this selling pressure, domestic institutional investors have continued providing market support, maintaining their buying streak and helping offset foreign outflows with consistent purchasing activity.

Foreign institutional investors (FIIs) and domestic institutional investors (DIIs) displayed contrasting trading patterns today, with foreign investors selling Indian equities while domestic institutions demonstrated strong buying interest. The divergent investment behavior reflects different market perspectives between international and local institutional players.

Trading Activity Summary

The institutional trading data reveals a clear contrast in investment approaches between foreign and domestic players:

Market Impact Analysis

The substantial difference in transaction volumes highlights the significant role of domestic institutional investors in supporting market liquidity. DIIs purchased over 16 times the value that FIIs sold, demonstrating robust domestic institutional confidence in Indian equities. This buying pattern suggests that domestic institutions are capitalizing on opportunities created by foreign selling pressure.

Investment Flow Dynamics

The contrasting investment flows indicate different risk assessments and market outlooks between foreign and domestic institutional investors. While FIIs reduced their exposure to Indian markets through net selling, DIIs increased their positions substantially. The net positive institutional flow of ₹1,641.72 crore provides strong support to market sentiment and helps absorb selling pressure from foreign investors.

This trading pattern reflects the evolving dynamics of institutional participation in Indian capital markets, where domestic institutions continue to play an increasingly important role in market stability and growth.