FPIs Turn Buyers In February But Financial Services Still Biggest Loser

Consumer services, automobiles and auto components, healthcare and capital goods recorded the biggest foreign inflows in February as overseas investors turned buyers of Indian stocks after selling in January.

Financial services, construction, fast-moving consumer goods, and telecommunication witnessed net outflows during the month, according to data from the National Securities Depository Ltd.

Overseas institutional investors mopped $186 million, or Rs 1,539 crore, worth of stocks in February. Foreign investors turned buyers in the second fortnight of the month. In the first half, there was an outflow of Rs 4,919 crore. The primary markets saw an inflow of Rs 4,946.62 crore, the NSDL data showed.

Foreign investors have sold Indian equities worth Rs 17,845 crore so far this year, until March 5.

"As we approach elections and the return of the incumbent government, the flows are expected to only move higher," said Anil Kumar Bhansali, head of Treasury and executive director at Finrex Treasury Advisors.

Inflows of $25 billion are expected in the next fiscal. So, flows are going to increase in the coming quarters, he said.

January's outflows were the highest in a year, the NSDL data showed. The overall market experienced a positive inflow of Rs 5,000 crore. Only the financial services sector saw a significant Rs 30,000 crore outflow, which resulted in a change in overall flows.

January's foreign portfolio investment outflows can be linked to people's disappointment with HDFC Bank Ltd., Helios Capital Asset Management (India) Pvt.'s Samir Arora told NDTV Profit.

Consumer services witnessed the largest inflow of Rs 7,538 crore in February, compared with an inflow of Rs 918 crore in January.

The automobile and auto component sectors saw the second largest inflows at Rs 5,542 crore. In January, the sector saw an outflow of Rs 2,067 crore.

The sector saw the third-largest inflow of Rs 5,199 crore as overseas investors turned buyers after offloading Rs 362 crore in January.

Financial services saw the largest outflow at Rs 9,977 crore. That, however, narrowed from an outflow of Rs 30,013 crore in January. In February, the Nifty Financial Services fell 0.44%.

Construction witnessed the second-largest outflow at Rs 4,494 in the month. The sector saw outflows of Rs 293 crore in January.

"For February, FPIs have turned buyers into equity. This is despite the U.S. bond yields ruling high with the 10-year yield. FPIs may again turn sellers in some of the coming days. But they are unlikely to sell aggressively because their selling is not having any impact on the market, which is setting new record highs," said VK Vijayakumar, chief investment strategist, Geojit Financial Services Ltd.

FPIs will have to buy the same shares, which they are selling now, at higher prices when the situation turns favourable for buying. Therefore, even if they sell in the coming days, that will be subdued selling, Vijayakumar said.