As wild swings continue in financial stocks on Dalal Street, some investors are finding valuations in the space attractive. Gyrations in the index heavyweight sector come at a time when concerns about surging oil prices - thanks to the Russia-Ukraine war - have rattled world markets. That when fears of a more aggressive tightening of pandemic-era monetary policy in major economies have already kept the bulls on edge.
As of Tuesday's closing levels, Indian equity benchmarks have retreated about 14 percent from their all-time highs, clocked in October 2021, prior to which, they had scaled a chain of unprecedented levels in a near one-way, liquidity-driven rally.
So what has changed since October?
March could be the sixth straight month of FII outflows for Indian shares.
Market expert Ajay Bagga told CNBCTV18.com that despite emerging market funds seeing inflows, India is seeing foreign institutional investor (FII) outflows, a large part of which is in financial stocks. "Once that selling tapers out, we will see a bottom forming and then an upmove," he said.
As of March 8, FIIs have pulled out a net Rs 34,239.3 crore from Indian shares for the month so far, according to provisional exchange data.
According to separate data from NSDL, FIIs pulled out a net Rs 8,131 crore ($1.1 billion) from financial services shares during February 16-28, as against Rs 1,900 crore ($251 million) in the previous fortnight.
Bagga is of the view that valuations in Indian financial stocks are "getting to compelling levels... But the FII selling is not letting the prices settle down and consolidate. For now, we are slaves to global price action."
Net investment in equity across sectors (in crore rupees)
| Sector | Feb 1-15 | Feb 16-28 |
| Auto & auto components | -208 | -1,631 |
| Financial services | -1,900 | -8,131 |
| Insurance | -1,496 | -282 |
| Banks | 2,760 | -3,953 |
| Capital goods | -529 | -888 |
| Chemicals & petrochem | -465 | -594 |
| Consumer durables | -481 | -522 |
| Software & services | -5,626 | -5,358 |
| Oil & gas | -2,091 | -1,676 |
From October through February 2021, FII equity outflows stood at Rs 1,88,034.1 crore, though domestic institutional investors (DIIs) brought in Rs 1,30,274.8 crore, data shows.
Here's a look at net sales or purchases by institutional investors in the past few months:
| Month | FII/DII trading activity (in crore rupees) | |
| FII | DII | |
| February 2022 | -45,720.1 | 42,084.1 |
| January 2022 | -41,346.4 | 21,928.4 |
| December 2021 | -35,493.6 | 31,231.1 |
| November 2021 | -39,901.9 | 30,560.3 |
| October 2021 | -25,572.2 | 4,471.0 |
| September 2021 | 913.8 | 5,948.9 |
| August 2021 | -2,568.5 | 6,894.7 |
| July 2021 | -23,193.4 | 18,393.9 |
| June 2021 | -25.9 | 7,043.5 |
| May 2021 | -6,015.3 | 2,067.2 |
| April 2021 | -12,039.4 | 11,359.9 |
| March 2021 | 1,245.2 | 5,204.4 |
(Edited by : Akanksha Upadhyay)
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