What sectors are on the FPIs’ radar as they return to India?

Foreign investors have recently accelerated their purchases of domestic stocks. They bought nearly Rs 5,000 crore worth of shares in July, breaking their nine-month selling spree.

However, analysts remain cautious on the trend given the global backdrop of rising inflation and unchanged interest rates.

Vineet Bagri, Managing Partner, TrustPlutus Wealth India says FIIs have only now started to moderate their sales. Elevated dollar index indicates outflows, not inflows.

According to data compiled by YES Securities, IT, metals and financials were the largest pockets dumped by FIIs between April and June of this fiscal year.

On the other hand, Oil & Gas, FMCG, Automotive and Capital Goods saw increased interest with higher stakes during this period.

Additionally, some additional sectors were bought by FIIs in the first two weeks of July, including construction, healthcare, media and entertainment, and energy, according to NSDL data.

Overall, the analysts are particularly optimistic with regard to IT and banks, among other things.

In conversation with business standard, Nitin Raheja, Executive Director, Head – Discretionary Equities, Julius Baer Wealth Advisors, said FPIs are typically overweight financial services. Valuation concerns and tightening policy prompted FIIs to trim their holdings. IT, banks gain strength as FIIs become net buyers. Moderation in FPI outflows bodes well for the duo.

Geojit Financial Services’ VK Vijayakumar, meanwhile, is bullish on the auto and capital goods sectors.

According to the analyst, “Easing of the chip shortage crisis and resilient demand will help the auto segment, particularly cars and trucks, while impressive credit growth and green drives in capital spending will support capital goods.”

Aside from foreign capital inflows, stock-specific actions will continue to impact markets today. Vodafone Idea, IndiGo, Lupin, Adani Power and Gujarat Gas are among the key stocks to be on investors’ radars ahead of Q1 results. The RBI monetary policy meeting also starts today.

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