Sectors That Foreign Investors Bought And Sold In November

Consumer services and capital goods recorded the biggest foreign inflows in November as overseas investors turned buyers of Indian stocks after two months.

Healthcare also ranked among the top three sectors with highest inflows from foreign portfolio investors, according to data from the National Securities Depository Ltd.

Overseas investments into Indian stocks turned positive on November with an inflow of Rs 9,001 crore as U.S. Treasury yields softened and the domestic market stayed resilient. Inflows stayed negative for the fifth consecutive fortnight in the first 15 days of November but turned positive because of buying in the second half of the month. But eventually turned positive by the end of the month, according to data from the National Securities Depository Ltd.

Foreign investors have bought Indian equities worth approximately Rs 1.26 lakh crore so far this year.

Sectors like capital goods and consumption may attract more flows due to the government's emphasis on capital expenditure and rural spending ahead of the Lok Sabha election next year, Kunal Sodhani, vice president, Shinhan Bank (Global Trading Centre) said. "Also, it is important not to miss out on the banking sector."

Consumer Services witnessed the largest inflow of $525 million or Rs 4,370 crore in November. That compares with an outflow of $22 million in October. The sector has contributed 11.28% of the total inflows this year.

India has seen strong services activity, helping attracts FPI inflows towards the consumer services sector, Sodhani said. Revenue growth has been seen decent as well, he said.

Capital goods witnessed the second largest inflow at $428 million or Rs 3,571 crore. In October, the sector saw an inflow of $103 million or Rs 857 crore.

Healthcare saw the third-largest inflow of $179 million or Rs 1,493 crore as overseas investors turned buyers. The sector witnessed an outflow of $130 million in October.

Financial services saw the largest outflow at $479 million or Rs 3,993 crore. That, however, narrowed from an outflow of $1,418 million or Rs 11,801 crore in October.

Overseas investors turned sellers in financial services in August after nine straight fortnights of buying.

In November, the Nifty Financial Services Index rose 5.24%.

Power witnessed the second-largest outflow at $355 or Rs 2,952 in the month. In previous month, the sector witnessed an outflow of $355 million.

The sector recorded the third-largest outflow at $204 million or Rs 1,699 crore compared with an outflow of $355 million in the prior month.

A decline in US Treasury yields and a weakening dollar, fuelled by growing expectations that the Federal Reserve is done with its rate hikes, are prompting increased inflows of foreign capital into emerging markets. Indian markets have also shown resilience, with the NSE Nifty 50 recording its best month of 2023 in November with gains of 5.52%.

India is still the largest recipient of FPI flows so far this year among emerging markets. The FPIs were sellers in Thailand, the Philippines, Indonesia, Malaysia and Vietnam, according to Bloomberg data.

Kunal Sodhani, vice president, Shinhan Bank (Global Trading Centre)

"India's stellar GDP growth in Q2 and positive cues from state elections boosted market sentiment," said. "FPI money is hot money as quickly as it comes, it can go as well. One needs to focus more on the FDI flows, as they have gone around half as compared to last year."

If foreign direct investment picks up, then India continues to remain a bullish story. Political stability is acting as a strength, as major economies are seen struggling on that part as well, according to Sodhani.

V.K. Vijayakumar, chief investment strategist at Geojit Financial Services

The FPI response will be crucially determined by the market trend, which in turn will be influenced by the state election results. They are unlikely to miss that rally by big selling and might buy into financials where the valuations are fair, according to Vijayakumar.

"However, since overall market valuations have reached high levels, FPIs may turn sellers at higher market levels."

Mandar Bhojane, research analyst at Choice Broking

The substantial buying from both foreign institutional investors and domestic institutional investors is expected to provide strong support for the market to move higher in the coming days, Bhojane said.

"Therefore, traders and investors are advised to maintain their long positions with a trailing stop loss set at 20,700 levels."