Financial services draws most FPI flows in September

Overseas investors sold shares worth ₹7,054 crore across eight sectors in the second-half of the month. The consumer services sector witnessed the highest foreign outflows at ₹2,784 crore, after receiving inflows worth ₹4,158 crore in August.

“The FTSE weight up in ICICI Bank and Kotak Bank in the latter half of September would have been one of the drivers of foreign inflows in financial services,” said Sriram Velayudhan, senior vice president, IIFL Securities.

Velayudhan said that the non-banking financial company theme was gaining momentum in September due to anticipation of an interest rate cut.

Analysts said that the momentum in China due to the recently announced stimulus to revive its economy in the latter half of September will have a bearing on the sentiments here. “Financial services sector is directly correlated with foreign flows and given the risk-off sentiment on India among foreign investors, the sector is likely to bear the brunt in the upcoming months,” said Divam Sharma, founder and fund manager, Green Portfolio PMS.

Sharma said that given the rise in crude oil prices, oil & gas could also see a dent in foreign flows.

Fast moving consumer goods (FMCG) and healthcare continued to receive strong foreign inflows worth ₹3,528 crore and ₹2,987 crore, respectively, in the last 15 days of September.

These investors had allocated ₹1,372 crore to FMCG in the first-half of the month while investing ₹3,652 crore in healthcare.

“Foreign investors have increased exposure to defensive sectors such as FMCG and healthcare amid global volatility,” said Velayudhan.

In the second-half of September, foreign investors bought shares worth over ₹2,000 crore in realty, capital goods and services sectors.

Foreign investors renewed buying interest in the metals and mining sector, purchasing ₹3,012 crore in the second-half of the month, after selling ₹1,857 crore in the first-half of the month. They had dumped shares worth ₹3,773 crore in the sector in August.

“The metals & mining sector has seen foreign inflows because of the China stimulus since China is the largest consumer of metals globally,” said Sharma.

Foreign investors offloaded shares worth ₹2,312 crore and ₹1,267 crore in oil & gas and information technology (IT) sectors in the last 15 days of September.

“Consumer services sector is facing headwinds since the demand uptick is waning,” said Sharma. The recent interim rally in IT stocks was largely due to liquidity and the economic uncertainties regarding the US could adversely impact discretionary spending ultimately leading to foreign outflows, he said.

Velayudhan said that typically, foreign investors buy IT stocks in expectation of an interest rate cut and would have reduced positions which is likely the reason for outflows in the IT sector.

Reference Link: https://economictimes.indiatimes.com/small-biz/sme-sector/call-for-entries-apply-now-for-the-et-msme-awards-2024/articleshow/114110387.cms