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

Foreign investors bought equities worth $1,524 million, or Rs 12,575 crore, in the first half of March.

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(Source: Christian Dubovan on Unsplash)

Foreign investors turned net buyers and pumped money into the Indian equity markets in the first half of March.

This came after a selloff of Rs 28,852 crore in January and Rs 5,294 crore in February, according to the data from National Securities Depository Ltd.

Overseas institutional investors bought equities worth $1,524 million, or Rs 12,575 crore, in the first half of March, according to a report by Emkay Global Financial Services Ltd.

The inflow recorded in the first half of March was mainly because of $1.87 billion, or Rs 15,446 crore, investment by GQG partners in Adani Group stocks, the Emkay Global report said.

According to NSDL, foreign institutions have remained net sellers so far in 2023 and offloaded Indian stocks worth Rs 27,299 crore.

"Since risk-off is the dominant market mood now following the bank failures in the U.S. and fears of contagion, FPIs are unlikely to turn buyers in the near-term," said VK Vijayakumar, chief investment strategist at Geojit Financial Services Ltd.

"The collapse of the SVB Bank in the U.S. has impacted sentiments in the market. So, FPIs are likely to be cautious in their approach in the coming days," Vijayakumar said.

According to him, FPIs have been been consistent buyers only in capital goods and in financial services. They have been alternating between buying and selling in different fortnights. 

Sector-Wise Flows

Software And Services

Software and services saw the largest outflow at $458 million, or Rs 3,777 crore, in the first half of March. "The sector is underweight vs MSCI Index by 4.33% while the six-month average underweight is 4.41%," the report said.

During this period, Nifty IT index decreased by 4.59%, according to Bloomberg.

Energy

This sector witnessed an outflow of $279 million, or Rs 2,295 crore, after a small inflow in the previous fortnight.

The sector has seen significant outflows from FIIs in the last six months, with the total outflow being $2.4 billion or 17,267.1 crore.

"The sector’s underweight vs MSCI Index has increased sharply from -0.83% at the start of 2023 to -2.09% at the end of 15th March," the report said.

Commercial And Professional Services

This sector witnessed the largest inflow at $827 million, or Rs 6,800.2 crore, followed by the utilities sector with an inflow of $389 million, or Rs 3,198.6 crore.

Power

Power witnessed the second largest inflow at $388 million or Rs 3,190.5 crore. The sector saw an outflow of $60 million, or Rs 497 crore, in the second half of February.

Automobiles And Components

This sector saw the third largest inflow at $380 million or Rs 3,134 crore.

"The sector is currently underweight vs MSCI index by 1.2% which was around 0.5-0.6% six months earlier. Therefore, a return of buying in the sector ($1.3 billion or Rs 10,692 crore in the last six months) could signal bottoming out of prices," the report said.

In the first half of March, Nifty Auto index fell 4.42%, according to Bloomberg.

Financial Services

Financial services witnessed an inflow of $338 million, or Rs 2,790 crore, in the first half of March.

"FIIs are overweight in the sector by 7.82%, a decrease in stance of 18 basis points. The six-month average overweight is 7.68%," the report said. The global banking sector has witnessed a rout in the last two weeks.

FII inflow in the Indian financial sector signals positive sentiment for the country, the report said.

During this period, the Nifty Bank index declined by 4.05%, according to Bloomberg.

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