Shocking October! FIIs make massive Rs 80,000 crore sell off, here’s why

Foreign institutional investors are on an unabated selling streak in Indian stock markets and they have sold shares worth Rs 80,954 crore so far this month making it the worst month for FII investment on record, data from the National Securities Depository limited (NSDL) showed.

Before October 2024, March 2020 was the worst month for FII selloff.  They sold shares worth Rs 61,973 crore in March 2020 when the lockdown was announced by the government to curb the spread of COVID-19 pandemic.

Analysts say that flight of money from India to China after the announcement of stimulus measures by China, US 10-year yield curve moving up and profit booking after they made good money in India are some of the reasons for flight of capital from India, analysts said.

Earlier this month, China pledged to significantly increase debt to revive its sputtering economy. The Chinese central bank also announced slew of rate cuts and also announced plans to redevelop cities and increase bank lending for those projects.

"The selling by FIIs is happening in largecap shares like Reliance Industries and HDFC Bank which is bringing down the benchmarks. However, fundamentally there is nothing wrong with these companies," Deven Choksey, Managing Director at DR Choksey Finserv told Republic Business.

"With 10-year US treasury yield moving up... it seems that FIIs are moving money to debt. China stimulus measure is also leading to flight of money from India. However, fundamentals of Indian markets remain strong and there is nothing wrong with the business sentiment," Choksey added.

The Indian equity benchmarks were on track to close lower for fifth straight session on Friday dragged down by losses IndusInd Bank, Larsen & Toubro Mahindra & Mahindra, HDFC Bank , Reliance Industries and NTPC as string of weak corporate earnings and continuous selling by foreign institutional investors (FIIs) dampen investor sentiment towards equities. The Sensex fell as much as 864 points and Nifty 50 index dropped below its important psychological level of 24,100.