REITs Reduced Exposure to Banking and Financial Stocks in FY22: Analysis


Foreign portfolio investors (FPIs) significantly reduced their exposure to banking and financial stocks in the 12 months to March 2022. By March 2021, FPIs had invested one in three dollars (33.1%) in banking and financial stocks. That fell 430 basis points (bps) to 29.1% at the end of March 2022, analysis by REITs shows. The decline in exposure to the financial space is explained by sales of $17.1 billion by foreign investors in FY22.

While REITs are deploying the maximum in the banking sector, the latter has to bear the brunt during episodes of capital repatriation.

Within the banking and finance space, private banking and insurance accounted for the peak REIT outflows in FY22.

As a result, the Private Banks Performance Gauge has significantly underperformed. It rose just 4% in FY22, compared to a 19% jump in the Nifty 50 index.

After financials, automotive, cement & construction and capital goods are the other sectors where REITs have reduced their exposure. The Auto Gauge also underperformed, gaining just 7% in FY22.

At the same time, REIT exposure to the oil & gas, power and IT bundle increased by 200 bps, 180 bps and 100 bps respectively. The oil and gas sector outperformed with a 42% increase in FY22.

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