Foreign funds bullish on capex theme, also buy into IT, healthcare

Mumbai: Foreign fund managers’ purchases in February were centred around two themes: first, beneficiaries of the government’s capital expenditure and the country’s services industry; and second, companies with cheaper valuations. To bet on the government spending and the Indian economy, these investors pumped money into capital goods and services companies. Information technology, and healthcare sectors, which have been under-performers in recent times, were their focus because of cheaper valuations.

About 80% of the foreign portfolio investor (FPI) inflows into Indian equities in February 2023 went into capital goods, services, information technology, and healthcare.

FPIs bought capital goods stocks worth nearly ₹2,664 crore in February after selling to the tune of ₹86 crore in January,

The BSE Capital Goods index gained nearly 2% in last one month compared to the 1.7% fall in the Sensex. Capital goods stocks, which have underperformed in the last few years, have once again caught investors’ attention due to the government’s continued focus on manufacturing in India through production-linked and policy incentives.

FPIs have bought shares worth ₹1,963 crore in the service sector. They invested over ₹1,000 crore in IT stocks after selling shares worth ₹2,133 crore in January. Other sectors in which FPI flows were positive include healthcare, automobiles, and construction.

FPIs have sold shares worth ₹4,973 crore in the oil & gas sectors, whereas the power and metal & mining sectors saw an outflow of ₹2,848 crore and ₹2,642 crore respectively. FPIs net outflow from Indian stocks in February was ₹5,543 crore.