Sectors That FPIs Bought And Sold In The Second Half Of May
FPIs bought Indian equities for the third month in May, and turned net buyers in 2023. They bought stocks worth Rs 43,838 crore.
Foreign investors bought Indian equities for the third straight month, and turned net buyers in 2023.
Overseas investors net bought stocks worth Rs 43,838 crore in May, the highest since August 2022, according to data from the National Securities Depository Ltd. They have been net buyers of Rs 36,392 crore worth of Indian equities till date in 2023.
Foreign portfolio investors turned net buyers of Indian equities in March, buying Rs 7,936 crore worth of stocks. This comes after a sell-off of Rs 28,852 crore in January and Rs 5,294 crore in February.
"A survey among foreign portfolio investors showed that India is now the consensus overweight among all emerging markets. In May, India attracted the largest investment among all emerging markets, and FPIs were sellers in China," said VK Vijayakumar, chief investment strategist, Geojit Financial Services Ltd.
"FPIs are likely to continue their investment in India in June too, since the latest GDP data and high frequency indicators reflect a robust economy gaining further strength. Financials, automobiles, telecom and construction are attracting big investments," he said.
"The FII inflows has been strong in the Month of May at $5.9 billion and inflows in June are tracking at $1 billion. Relatively better growth and macro stability indicators—moderation in inflation and expected reduction in current account deficit—has helped India differentiate itself in the EM space. CPI inflation is expected to average at 5% in FY24, remaining within RBI’s target range of (2% to 6%)," said Gaura Sen Gupta, India economist, IDFC First Bank.
Another factor, which could be supportive to emerging market FPI inflows, is that the Fed's rate hiking cycle is close to an end. That said, rate cuts from the Fed are not expected any time soon, according to Sen Gupta. Quantitative Tightening continues. Hence, FPI flows are expected to remain volatile for the full year, she said.
Inflation in India is under control and less intensive as compared to rest of the world, according to Indranil Pan, chief economist at Yes Bank. The Indian currency is also stable.
"We did not see any risk of current account deficit. It is relatively comfortable," he said.
Sector-Wise Flow
Financial Services
Financial services saw the largest inflow of $1,123 million, or Rs 9,289 crore, in the second half of May. The sector witnessed the fourth consecutive fortnight inflow. In April, the sector witnessed an inflow of $939 million, or Rs 7,690 crore.
During this period, the Nifty Bank rose by 0.13%.
Automobile And Auto Components
The sector witnessed the second largest inflow at $484 million, or Rs 3,997 crore, in the second half of the month. In April, the automobile segment witnessed an inflow of $243 million or Rs 2,010.9 crore.
Nifty Auto rose 1.36% during the period, according to Bloomberg.
Consumer Services
Consumer services saw the third largest inflow of $234 million, or Rs 1,931 crore, during the period. It saw an inflow of $114 million, or Rs 936 crore, in the first half of May.
Metals And Mining
The sector saw the largest outflow of $114 million, or Rs 942 crore, after witnessing an inflow of $39 million, or Rs 323 crore, in the second half of April.
Software And Services
Software and services witnessed an outflow of $90 million, or Rs 746 crore, in the second half of May. It witnessed an outflow of $18 million, or Rs 145 crore in the first half.
During this period, the Nifty IT rose 4.10%, according to Bloomberg data.