Banks are seeing the maximum sell-off. The big fall in banks has not got much to do with Indian banks. The Nifty Bank has fallen much more this week than the Nifty and that holds true for today as well.

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The first reason is that banks did very well year to date, January, February were outstanding months for Nifty Bank and for banks in general. For instance, year to date Nifty Bank has fallen 1 percent, the Nifty has fallen close to 5 percent and whether one looks at Nifty IT, realty, FMCG all the other favorites - all of them underperformed banks. Banks did well so that's where one will take profit first.

The more important reason is that this is an FII related sell-off of India. So selling India what would you sell? You would sell the FII favorites and the three big FII favorites happened to be finance stocks - HDFC, HDFC Bank, Kotak Mahindra Bank.

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The FIIs are most represented there. In some cases, 50-75 percent of the specific stock and unfortunately, these three stocks are also weighted very heavily both in the Nifty Bank and in the Nifty. So, when the Nifty sells off or FII sell-off Nifty, an outsized portion falls on these three stocks.

Watch the accompanying video of CNBC-TV18’s Latha Venkatesh for more details.

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First Published:Mar 2, 2022 4:03 PM IST