Financial services received the highest inflows as Foreign Portfolio Investors (FPIs) pumped ₹12,253 crore into the sector in the first-half of September, after selling a similar amount in August. Nifty Bank and Nifty Financial Services indices gained 6.13% and 6.95%, respectively, in the past month. From January to August, overseas investors pulled ₹64,932 crore out of the shares in the sector.
“While the rate cut by the US Federal Reserve is a major trigger for foreign inflows into banks and NBFCs, their relatively more attractive valuations compared to the broader market are also leading to foreign investment in the sector,” said Pratik Gupta, CEO, Kotak Institutional Equities.
Gupta said that since the quantum of rate cut is high at 50 basis points, further inflows are likely in the financial services sector, subject to global volatility.
The healthcare sector continued to witness foreign inflows as investors allocated ₹3,652 crore in the first-half of the month after purchasing ₹5,831 crore in August.”Healthcare is seeing inflows, partly based on the potential demand for vaccines and other pharma products to treat newer global diseases,” said U R Bhat, co-founder, Alphaniti. “Apart from seasonal inflows, consumer durables and FMCG are witnessing foreign inflows as defensive plays since markets are at all-time highs.”In the first-half of September, foreign investors bought shares worth ₹2,226 crore and ₹1,372 crore in consumer durables and fast-moving consumer goods (FMCG) sectors.
Gupta said that the consumption sectors had been underperformers and the uptick in demand is leading to foreign investment in these sectors.
Realty, capital goods and power sectors witnessed foreign inflows worth ₹2,903 crore, ₹1,778 crore and ₹1,167 crore, respectively, as foreign investors renewed buying interest in the first 15 days of September, after dumping shares in these sectors in August.
The expectations of RBI following the Fed, leading to a shallow rate cut cycle in India, could be the trigger for inflows in other rate sensitive sectors such as power and realty also, said Gupta. Realty and power sector witnessed foreign outflows worth over ₹1,100 crore last month.
Overseas investors sold shares worth ₹4,915 crore across 6 sectors in the first-half of the month. The automobile sector witnessed the highest foreign outflows at ₹1,983 crore, over outflows worth ₹2,379 crore last month.
Bhat said that the automobile sector has seen some unexpected build-up of inventory due to mild disappointment ahead of the festive season which could have led to foreign outflows.
Foreign investors offloaded shares worth ₹1,857 crore and ₹422 crore in metals & mining and services sectors in the first 15 days of September.