FII: FII bulls find their way back to Dalal Street, pour in Rs 43,900 crore in 13 sectors

MUMBAI – After being net sellers in the last two months, foreign portfolio investors made a comeback to Dalal Street in this month, as they poured in a whopping Rs 43,900 crore across 13 sectors in the first fortnight of March.

About eight sectors received inflows of more than Rs 1,000 crore each, data by NSDL showed.

FII dollars chased fast moving consumer goods stocks the most, as this sector has alone received inflows of Rs 11,180 crore in the first fortnight of March. This was against the outflows of over Rs 1,400 crore in the preceding fortnight.

The other sector to see a comeback by FPIs, a sector close to their heart, was financial services. FPIs poured in Rs 5,365 crore in the first fortnight of March. The big bulls were big sellers in this sector pulling out close to Rs 40,000 crore in the last two months.

If we look at the cumulative data for FY24, FPIs have net invested over Rs 31,200 crore in the financial services sector as of March 15. The figure would have been higher if not for the massive sell-off in January and February.

Consumer services and capital goods sectors continued to witness inflows from FPIs. In the consumer services sector, they net invested Rs 4,117 crore in the first 15 days of March, compared to around Rs 4,500 crore in the preceding fortnight. Consumer services has received the third highest inflows in the current financial year. As of March 15, FPIs have net invested Rs 31,674 crore in the sector. The capital goods sector received inflows of Rs 2,838 crore, compared to Rs 2,985 crore in the second fortnight of February. So far in the current financial year, this sector has seen highest buying by FPIs to the tune of over Rs 45,700 crore.

After FMCG, the sector that received the second highest inflows in the first fortnight of March was telecommunications. FPIs poured in Rs 6,648 crore, after selling stocks in the preceding fortnight.

The realty sector saw significant inflows in the first fortnight of March to the tune of Rs 4,031 crore, which was nearly five times higher than the inflows seen in the preceding fortnight.

The automobiles sector saw net inflows of Rs 3,697 crore in the first fortnight of March, compared to inflows of Rs 3,000 crore in the preceding fortnight. In FY24, this sector saw the second highest inflows to the tune of Rs 31,639 crore.

Which stocks FPIs sold?
Information technology, oil and gas, and healthcare were the three sectors ditched by FPIs this month.

FPIs sold stocks worth Rs 1,104 crore in the IT sector during the first fortnight of March, which was tad higher than the sell-off in the preceding fortnight. Renewed concerns over the slowdown in business in key export markets and budget constraints among clients has prompted FPIs to pull out money from the high value stocks in the sectors.

The oil and gas sector remained in the sell list of FPIs, as they pulled out Rs 1,110 crore from the sector this month. However, this was much lesser than the sell-off worth Rs 4,600 crore seen in the preceding fortnight.

In the healthcare sector, FPIs turned net sellers, offloading stocks worth Rs 1,577 crore in the first fortnight of March. They had net bought stocks worth Rs 987 crore in the preceding fortnight.

Will inflows sustain?
A dovish view from the US Federal Reserve on Thursday, which retained its guidance of three rate cuts in 2024, has soothed nerves and kept the hope of a June rate cut alive. This may support capital flows into emerging markets.

However, FPIs have been changing their investment strategy in response to the movement in the bond yields in the US. Therefore, if bond yields remain firm, FPIs may again turn sellers, going forward, experts said.

Another trend to note is the weakness in the midcaps and smallcap stocks this month, which has persuaded FPIs to reduce selling in largecaps and even buying in limited quantities in sectors like banking, telecom and automobiles, said V K Vijayakumar of Geojit Financial Services.

One needs to see how the trend for the broader market pans out for the rest of the month and how US bond yields move to gauge the mood of FIIs.

(Data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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