Sectors Foreign Investors Bought And Sold In Second Half Of January

Foreign investors continued to withdraw money from Indian equities in the second half of January, driven by selling in the financial and material sectors.

That took took the total outflow in January to $3.53 billion, according to an Emkay Global Financial Services Ltd. report.

Overseas investors net bought Rs 14,398.8 crore worth of Indian stocks in December, and hit a single day record of at Rs 9,010 crore on Nov. 30. But the foreign portfolio investors have net sold Rs 47,455.4 crore worth of Indian stocks so far in 2023.

"FPIs are selling in India and buying in cheaper markets like China, Hong Kong and South Korea where valuations are attractive", said V K Vijayakumar, chief investment strategist at Geojit Financial Services Ltd.

"This short India and long other cheaper markets strategy has led to big underperformance of the Indian market so far this year."

While China, Hong Kong and South Korea are up by 4.71%, 7.52 % and 11.45% respectively, India is down by 1.89%, Vijayakumar said.

"This kind of underperformance is unlikely to last long."

The sector saw the largest outflow in the second half of January at $1,040 million or Rs 8,503 crore, according to the Emkay Global report.

FIIs are overweight in the sector by 8.07%. It has steadily increased from 7.01% in September 2022, mainly on the anticipation of HDFC Bank Ltd.'s inclusion in the MSCI Index, the note said.

Software and services sectors saw an inflow of $162 million or Rs 1,324 crore in the second half of January, following a selloff of $424 million or Rs 3,456.8 crore in the first half of the month.

Foreign investors are underweight versus the MSCI Index by 4.68%, while the six-month average is 4.36%, the note said.

The sector continued witnessing net outflows, with a selloff of stocks worth $584 million or Rs 4,772 crore.

The sector has seen overseas investors withdraw $2.1 billion in the last six months, according to the note.

The sector's weight in total FII asset under management has decreased from 13% in July 2022 to 10.6% in January 23, while its average underweight against MSCI Index has been 0.99%, according to the report.

Materials witnessed a second consecutive fortnight of inflow at $132 million or Rs 1,089.6 crore, led by $226 or Rs 1,851-crore buying in the metals and mining sub-sector. Chemicals and cements witnessed outflows of $38 million and $59 million, respectively.

FIIs are underweight on the sector versus the MSCI by 1.88%, while the six-month average has been 2.05%, the note said.

The automobile sectors has seen its underweight stance versus MSCI steadily expand from 0.68% in September 2022 to 1.22% in January 2023, the note said.

The FIIs bought $256 million or Rs 2,089 crore, the largest inflow in any sector, in the second half of January. Nifty Auto Index rose 4% during the period.

Capital goods saw an inflow of $116 million, while commercial and professional services sectors witnessed an outflow of $186 million. Consumer services witnessed selling worth $145 million.