FII tracker: Rs 20,000 crore just flew into banks & other 5 sectors

NSDL data shows that banks and other financial stocks were on top of the shopping list of foreign investors. Financials saw buying worth Rs 8,382 crore from May 1-15, followed by auto (Rs 4,705 crore), oil and gas (Rs 2,319 crore), healthcare (Rs 1,957 crore), FMCG (Rs 1,664 crore) and capital goods (Rs 1,153 crore).

Altogether FIIs were net buyers to the tune of Rs 24,740 crore during the fortnight with small selling seen in sectors like IT, power, construction and media.

Within the emerging market pack, India has been the favourite of FIIs. So far in the month of May, FIIs have pumped in the most in India ($2.5 bn) and Taiwan ($1.4 bn) whereas they pulled out maximum from Thailand ($427 mn) and Indonesia ($199 mn).

Market watchers say the global backdrop is turning favourable since the US Fed might pause soon, perhaps after one more last 25 bps hike in the next meeting on June 13-14.

“The Fed is no longer saying that additional rate hikes would be appropriate. The evolving monetary policy stance of the Fed and the RBI are slowly turning favourable for growth. This augurs well for India’s growth in FY24 and, therefore, is good for markets too,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Dalal Street veteran Ajay Bagga is worried about selling by domestic funds. “Near to the amount that the FIIs are bringing in, we have been seeing domestic institutions selling. Now, normally the mutual funds or the insurers will not take a market timing call in terms of raising cash. It is mostly because of end demand. So is there some pressure? Is there some selling coming in on the mutual fund side by HNIs who are using these market levels to lighten positions? That is the big question,” Bagga said.

Given the assumption of a soft landing in the US, he is expecting FII flows to continue.

After financials, IT is the biggest investment of FIIs in India but tech is now the biggest underweight sector for the big boys. BSE500 shareholding analysis shows that FIIs were net sellers in the sector in March quarter as they further trimmed their relative positions in IT.

“When FIIs come in, their first port of call is banking. IT has global headwinds, but it might look interesting three months down the line. So banking first and then look at chemicals. Again we have had some companies with very good results. They should continue to do well,” Bagga said.

An interim review of March quarter earnings season shows that autos, consumer discretionary and lenders saw upgrades while IT, industrials and cement saw cuts.

Last week, Jefferies’ Global Head of Equity Strategy Christopher Wood was seen picking India’s third largest private lender Axis Bank and Thermax Limited in his India Long-only portfolio.

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