Foreign investors turn net sellers after 6 months of inflows; trim stake in these sectors in April

After six months of consecutive inflows, foreign institutional investors (FII) turned net sellers of domestic stocks in April. FIIs pulled out $1.29 billion worth of domestic securities in April, the highest since March 2020, according to domestic brokerage and research firm Edelweiss Securities. The outflows came about as India began witnessing a massive outbreak of the coronavirus once again, while the world was easing restrictions and expanding vaccination coverage. Prior to last month’s outflow, FPIs pumped in $26.8 billion in equities between October 2020 and March 2021. 

The outflows are just a fraction of what FIIs had pumped in since October last year. The largest selling was witnessed by the banking and finance sector stocks, where FIIs pulled out $1.29 billion. This was followed by the oil and gas sector, where outflows stood at $466 million, and the metal sector saw FIIs sell securities worth $242 million. 

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Other sectors that saw investors pull money out included auto, logistics, pharmaceuticals, cement, and capital goods. However, in the three months ending April 2021, banking and finance sector saw the most FII inflows, along with the insurance space. “Out of the $1.29 billion outflows in April, $510 million came in the first half of the month while the second half saw outflows of $787 million,” said Edelweiss.

FMCG and the real estate sector continued to attract foreign investors, with both seeing over $200 million in inflows in April. The Information Technology space also witnessed a turn around in April as investors turned net buyers. Most of the fund inflows towards the IT sector came in the second half of April as cases spiked sharply in India. In the last three months, FIIs have increased their ownership in metals the most, followed by oil and gas, power, capital goods, cement and logistics. 

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On a 12-month rolling basis, foreign fund flows have been largely directed towards the banking and the finance sector — attracting $9,420 million, followed by FMCG at $5,394 million, Oil & Gas $2,990 million, and Captial Goods $2,250 million. Currently, Foreign Portfolio Investors (FPIs) AUM is $547 billion against $552 billion in March.