Consumer services, IT, power see sharp FII outflows in September

Consumer services, information technology, and power stocks faced the sharpest foreign investor selling in the first half of September even as financial services attracted fresh buying interest.

Overseas investors offloaded ₹3,246 crore worth of consumer services shares in the first 15 days of September, after selling ₹458 crore in the previous month, NSDL data showed. IT and power stocks also remained under pressure, with foreign investors pulling out more than ₹2,000 crore from each sector during the period. In August, they had sold ₹11,285 crore worth of IT shares and ₹4,066 crore in power. “In power, margin pressures rose from volatile fuel costs and currency depreciation, causing doubts about profitability,” said Om Ghawalkar, market analyst, Share.Market. “The selling signals a tactical pullback reflecting risk management rather than a fundamental shift away from these sectors.”

U R Bhat, co-founder & director, Alphaniti, said IT stocks remain vulnerable. Concerns around the US move late last week to raise the one-time cost of H-1B visas could result in more selling soon.

Amid the broader selling, the financial services sector recorded foreign inflows of ₹1,634 crore in the first half of September after an accelerated sell-off of more than ₹23,000 crore in August and total outflows of ₹15,471 crore between January and August.

“The financial services sector is largely domestic-oriented and the valuations in the sector remain reasonable, especially those of state-owned lenders,” said Bhat. “The banking stocks offer a safer bet to foreign investors while global uncertainty persists.” The Bank Nifty Index gained 1.2% last week, outpacing the benchmark Nifty’s 0.9% rise. “FPIs appear to be banking on a cyclical rebound driven by resilient loan demand and improving asset quality,” said Ghawalkar. “This reversal also reflects value buying after sharp corrections.”

In total, foreign investors sold ₹16,737 crore across 15 sectors during the first half of September. Realty (₹1,927 crore), healthcare (₹1,601 crore), telecom and oil & gas (over ₹1,500 crore each) were among other major laggards.

At the same time, overseas investors pumped ₹6,976 crore into eight sectors. Automobiles attracted the most with ₹1,908 crore, followed by capital goods (₹1,518 crore) and metals & mining (₹1,394 crore).