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FPIs pump in $35.37 billion so far this fiscal; financials, IT preferred stocks

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Photo: iStock

  • For fiscal year 2020-21,FPI's have raised their holdings in financial services by 2.70% to 36.19 till 15th Feb from 33.49% at the end of 31 March 2020, and Capital Goods stood a distant second with an increase of 1.3% to 3.95% till 15th Feb.
  • India’s economic recovery and the expected pick-up in financials and loan disbursals are behind the robust numbers

MUMBAI : Foreign portfolio investors (FPIs) have pumped in $35.37 billion into domestic equities and a review of their allocations reveals their penchant for financial and information technology (IT) stocks.

The maximum holding is in the financial services sector at $208.3 billion, followed by IT ($75.1 billion), oil and gas ($53.7 billion), automobiles and auto components ($28.7 billion), capital goods ($22.7 billion), pharmaceuticals and biotechnology ($22.2 billion), sovereign ($21.3 billion-debt), household and personal products ($19.4 billion), food, beverages and tobacco ($15.4 billion), and utilities ($13.3 billion), according to the asset under custody data from National Securities Depository Ltd (NSDL) available till 15 February.

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In 2020-21 so far, FPIs have raised their holdings in financial services by 2.7% to 36.19% till 15 February from 33.49% at the end of 31 March 2020. Capital goods stood a distant second with a rise of 1.3% to 3.95%.

Strong interest
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Strong interest

Indian stock markets have been on a tear, largely fuelled by inflows from FPIs. The benchmark BSE Sensex hit a record high of 52,000 earlier this year. FPIs have poured in a record $35.37 billion in Indian stocks so far this financial year. This will be the fourth time in the last two decades that foreign investors put in more than $20 billion in a financial year. In 2009-10, the inflow was $23.35 billion, followed by inflows of $24.29 billion in 2010-11. In 2012-13, the inflows were at $25.58 billion.

India’s economic recovery and the expected pick-up in financials and loan disbursement is said to be the reason behind the robust numbers. “Inflows into India, particularly, is likely to remain robust as the economy is staging a V-shaped recovery and corporate results are surprisingly better than expected. High delivery-based buying in private financials, IT, and telecom indicates FPI preference for the segments," said V.K. Vijaykumar, chief investment strategist, Geojit Financial Services.

Of the total holdings in financial services, FPIs infused $123 billion in bank assets, and $85 billion in others. Financial services constitute a large part of Nifty50 index with a weight of 38.1% as in January-end—the other reason for the higher allocation.

However, they pruned their exposure in some sectors, such as household and personal products, which saw a dip of 1.6% in holdings, food, beverages and tobacco by 1.28%, and telecom by 0.96%, according to the asset under custody data from NSDL.

“Deleveraging of balance sheets by India Inc, operating leverage because of pent-up demand and capex returning should in our view keep flows healthy as several reforms in CY2020 have positioned India as a serious alternative supply source in several industries," said S. Ranganathan, head of research, LKP Securities Ltd.

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