Extreme foreign selloff in India stocks may ease, suggests history

A pause in this persistent selling would also be a shot in arm for stocks with high foreign ownership, especially financial companies, due to close relationship between performance and fund flows

If history is a guide, the heaviest selling by foreigners of Indian stocks since the global financial crisis is poised to end, with any turnaround likely to be led by stocks with major holdings among overseas investors. 

That’s the view from Bloomberg Intelligence after foreign institutional investors net-sold $10 billion of local stocks since October, the most since 2008, on concerns over faster-than-expected policy tightening by the U.S. Federal Reserve. In January alone, FIIs dumped $4.8 billion of shares, the largest outflow across key emerging markets and the second-highest monthly tally for India. 

“The current sharp sell off may signal