Tariff lifts banking stocks’ haven appeal

Foreign investors are showing renewed interest as India’s banking sector has risen to the top of their wish lists

- Dipti Sharma

Foreign investors are once again turning bullish on Indian financial stocks.

What's fuelling this renewed love affair, say market participants, is the reassurance by lenders that the impact of US tariffs on their loan books would be minuscule, coupled with a broader revival in market sentiment.

Foreign portfolio investors pumped in $1.5 billion into banking and finance stocks in October, according to data from the National Securities Depository Ltd. This was the highest inflow into this segment in six months and a sharp reversal after FPIs pulled out $2.66 billion in August.

“The selloff in August was mainly triggered by the US tariff announcement, which opened a can of uncertainty,” said Trupti Agrawal, fundmanagerat WhiteOak Capital AMC. While sectors including seafood and textiles are heavily dependent on the US, she said banking faces no direct hit, although secondor third-order effects are possible.