Foreign Selling Hits Nifty 50 Hardest Since COVID-19
Foreign investors sharply sold Indian equities in the first half of March, with financials leading the charge, pushing the Nifty 50 to its worst fortnight since the COVID-19 crash in March 2020. Data from the National Securities Depository showed foreign portfolio investors offloaded stocks worth 527.04 billion rupees ($5.65 billion), with financials accounting for 60% of the outflows. Banking and financial sector indices fell 11.2% and 9.8%, respectively, dragging the Nifty 50 down 8.1% in just two weeks.
Rising crude prices amid the U.S.-Israeli conflict in Iran, a record-low rupee, and concerns over energy supply and inflation weighed on market sentiment. Analysts said global investors fear that higher energy costs could revive inflation and keep monetary policy tighter for longer, impacting energy-importing economies like India. Despite these headwinds, capital goods and a few other sub-sectors showed resilience during the selloff.
The heavy foreign exit has made financial stocks more attractive to domestic investors, but pressures remain. Governance concerns around HDFC Bank intensified selling after part-time Chairman Atanu Chakraborty resigned over “values and ethics,” causing the bank’s shares to drop 4.3%. Analysts caution that March outflows from financials could reach record levels before stabilizing.
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