The other two sectors where FPIs bought maximum shares include auto and auto ancillaries and capital goods, where FPIs invested ₹19,500 crore and ₹12,400 crore, respectively, since March 1.
FPIs pulled out nearly ₹1.1 lakh crore worth of BFSI shares between April 2021 and February 2023 amid rising interest rates, according to data compiled by primeinfobase.com.
Nifty Banks and Nifty Financial Services indices have rallied 11% since March 1, 2023, while some banks such as ICICI Bank, Axis Bank, and State Bank of India rallied nearly 12%.
In the past six months, the global and Indian financial systems have charted somewhat different trajectories, said analysts.
“The global financial system has been impacted by significant strains since early Mar 2023 from the banking turmoil in the US and Europe. In contrast, the financial sector in India has been stable and resilient, as reflected in sustained growth in bank credit, low levels of non-performing assets, and adequate capital and liquidity buffers,” said Jai Prakash Mundhra, analyst, ICICI Securities. “The Indian banking system profitability improved with return on assets (ROA) increasing to 1.1% in 2023 from a low of -0.2% in 2018.”
FPIs bought auto and auto ancillaries shares worth ₹6,129 crore in June 2023. According to analysts, after facing headwinds for the last three to four years, the auto sector is seeing some major headwinds turn into tailwinds and sales growth seen in the last few quarters to sustain.”The demand recovery is expected to sustain for two-wheelers, medium and heavy commercial vehicles, and three-wheelers. Exports seem to have largely bottomed out, but a recovery may take a couple of quarters,” said a note by Motilal Oswal Financial Services.
Overseas investors continued to cut exposure to information technologies, oil & gas, media & entertainment, and textiles stocks. FPIs sold IT shares worth ₹3,577 crore in June and nearly ₹18,000 crore in 2023. Their sales in 2022 were about ₹71,357 crore.
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