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Sectors That Saw Foreign Inflows And Outflows In The First Half Of April

Foreign institutional investors bought equities worth $1,069 million, or Rs 8,767 crore, in the first half of April.

<div class="paragraphs"><p>(Source:&nbsp;<a href="https://unsplash.com/@ibrahimboran?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Ibrahim Boran</a> on <a href="https://unsplash.com/s/photos/foreign-currency?utm_source=unsplash&amp;utm_medium=referral&amp;utm_content=creditCopyText">Unsplash</a>)</p></div>
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Overseas investors continued to pump money into Indian equities, mainly into financial services, automobile and auto component stocks during the first half of April, helping benchmark indices move off the five-month low they hit in late March.

Foreign institutional investors bought equities worth $1,069 million, or Rs 8,767 crore, in the first half of April.

FIIs snapped their two-month selling streak and turned net buyers of Indian equities in March, buying Rs 7,936 crore worth of stocks, according to data from the National Securities Depository Ltd. This comes after a sell-off of Rs 28,852 crore in January and Rs 5,294 crore in February.

Foreign institutions have remained net sellers so far in 2023 and offloaded Indian stocks worth Rs 17,567 crore, according to NSDL.

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"During the fortnight ending April 15, FPIs heavily bought financial stocks for Rs 4,410 crore. They were also buyers of automobiles and capital goods," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

"There were huge delivery volumes in stocks like HDFC Bank Ltd., HDFC Ltd. and Tata Motors Ltd. It can be safely assumed that the bulk of this delivery buying was done by FPIs. FPIs have also increased their holdings in ITC Ltd.," he said.

"Stocks in which FPI holdings are steadily rising are showing resilience even during market weakness. The only exception is IT stocks, which also saw FPI buying, though marginally, in the first fortnight of April. FPI inflows are likely to remain stable, going forward. Financials will continue to attract more inflows since the early Q4 results of the segment are very good," Vijayakumar said.

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Sector-Wise Flows

Financial Services

Financial services saw the largest inflow of $538 million, or Rs 4,410 crore, in the last fortnight of April, as compared with an outflow of $407 million, or Rs 3,346 crore, in the second half of March.

In the financial services sector, FIIs are overweight vs the MSCI Index by 7.98%, which has increased by 31 basis points from the last fortnight, according to a report by Emkay Global.

"This indicates that a large amount of FII inflow could have gone towards HDFC Bank, which currently is not in the MSCI Index but would become eligible for inclusion after the HDFC-HDFC Bank merger," the report said.

During this period, the Nifty Bank index rose by 3.23%.

Automobiles And Auto Components

This sector witnessed the second largest inflow at $154 million, or Rs 1,259 crore. The sector saw a small outflow of $53 million, or Rs 439 crore, in the second half of March.

In the first half of April, the Nifty Auto index rose 3.97%, according to Bloomberg.

Materials

Material witnessed an inflow of $141 million, or Rs 1,155 crore, in the first half of April; this is the third consecutive fortnightly inflow.

The inflow is led by buying in all its basic industries—metals and mining ($82 million or Rs 671.71 crore), cements ($28 million or Rs 229.36 crore), chemicals ($28 million), and forest materials ($3 million or Rs 24.57 crore), in the first half of the month, according to the Emkay Global report.

"FIIs are underweight in the sector by 2.3%, which has slightly declined from 2.44% in March," the report said.

Software And Services

Software and services saw an inflow of $122 million, or Rs 1,002 crore, in the last fortnight of April, as against an outflow of $381 million, or Rs 3,133 crore, in the second half of March.

During this period, the Nifty IT index fell 1.01%.

Energy

The sector saw an outflow of $69 million, or Rs 565.22 crore, after witnessing an outflow of $550 million, or Rs 4,524 crore, in the second half of March.

"FIIs have been aggressively selling energy stocks this year, and the total outflow from the sector in 2023 amounts to $756 million," the report said.

Real Estate

Real estate witnessed an outflow of $34 million, or Rs 278 crore, after witnessing an outflow of $6 million, or Rs 48 crore, in the second half of March.

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