Out of the 40 stocks in the NSE200 index where FPIs held more than a 25% stake, a total of 22 stocks have underperformed the Nifty 50 since September 15. Tube Investment, with about 30% FPI holding, witnessed a decline of 9% during this period, while HDFC Bank, in which FPIs own 54%, also saw a 9% drop. Info Edge, with 32% FPIs holding, declined by over 8%. The Nifty 50 has declined 3.2% since September 15.
“FPI selling on one hand and domestic participants buying is creating a performance gap in stocks where FPI holding is higher,” said Siddarth Bhamre, research head of Religare Broking.
FPIs sold shares worth ₹16,000 crore in September, while domestic institutional investors (DIIs) bought shares to the tune of ₹20,300 crore. On Tuesday, these investors were sellers worth ₹2,034 crore.
Tech Mahindra, Godrej Properties, Dr Reddy’s Laboratories and SBI Life Insurance Company, in which FPIs hold more than 25%, have declined more than 6% since September 15.
Benchmark NSE 200 index is up by 2% in the last two months compared to a fall of 3% in the MSCI Emerging Markets index. The outperformance in the NSE 200 was largely driven by DII and retail investor buying, which cushioned the selling by FPIs.
Analysts said FPI selling may continue for a while but advise individual investors against going underweight on equities.”We expect FPIs outflow to continue in the near term on account of rising US treasury yields, slowing global economic growth, and higher crude prices,” said Kedar Kadam, director of Waterfield Advisors. “Long-term investors need not be worried about current volatility in markets and focus on adding quality stocks on declines from a 3-4-year perspective and avoid chasing market euphoria.”
Bhamre said he is not perturbed by the underperformance of FPI-heavy stocks.
“If we look beyond a few months and look at the larger picture, then FPIs selling may not continue for long as India offers a high growth environment today,” he said.
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