The foreign institutional investors' flow was negative in the first half of January, driven by selling in the financial, software and services sectors, according to an Emkay Global report.
Overseas investors net bought Rs 14,398.8 crore worth of Indian equities in December, while it bought the most on Nov. 30 at Rs 9,010 crore.
Foreign institutions remained net sellers of Rs 23,254.4 crore of Indian stocks so far in 2023.
Sector-Wise Flow
Materials
The largest inflow was seen in the material sectors at $287 million, or Rs 2,340 crore, led by a $ 309-million, or Rs 2,519 crore, inflow in the metals and mining sub-sector, according to Emkay Global. The sector witnessed $27 million in cements and $57 outflow from chemicals.
The sector is underweight vs MSCI by 1.95%, while the six-month average underweight has been 2.05%, the Jan. 24 note said.
Financial services
The financial sector witnessed the largest outflow of $823 million, or Rs 6,709.8 crore, according to the report.
FIIs are overweight in the sector by 7.96%. It has steadily increased from 7.01% in September 2022, mainly in anticipation of HDFC Bank Ltd.'s inclusion in the MSCI Index, according to the note.
Software And Services
The sector continued to witness a large outflow in 2023, as it saw an outflow of $424 million or Rs 3,456.80 crore.
The sector is underweight vs MSCI Index by 4.34%, which is also its six-month average, the report said.
Energy
Energy sectors also witnessed an outflow of $347 million, or Rs 2,829 crore. The sector has seen significant outflows from the FIIs in the last six months, with total outflow being $2.1 billion, according to Emkay Global.
"The sector's weightage in total FII AUM has decreased from 13% in July 22 to 11.3% in Jan 23, while its average underweight vs MSCI Index is 0.97%", the note said.
Automobile & Components
The sector sold $131 million, and has seen its under-weight vs MSCI steadily expand from 0.68% in Sept 2022 to 1.31% Jan 2023.
"FIIs were aggressive buyers in the sector in Q2 ($900 million), in Q3 they bought just $200 million", the note said
A small inflow was seen in capital goods sector at $69 million, while a small outflow was seen from the FMCG sector at $41 million
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