FII stocks: Stocks that found favour & those fell aside in FPIs’ August reshuffle

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NEW DELHI: As the domestic benchmark equity indices hit new highs, foreign portfolio investors (FPIs) shopped for defensives such as IT, utilities and pharma names on Dalal Street even as they dumped high-beta stocks from the metals & mining, NBFCs and auto sectors, fortnightly data available for August showed.

Net-net, this institutional class investors were seen buying shares worth Rs 2,085 crore between August 1 and 15 after selling Rs 6,411 crore worth shares during the July 16-31 period. They bought IT shares worth Rs 1,087 crore, added utility shares to the tune of Rs 897 crore and pumped in some Rs 821 crore into pharma stocks, FPI inflow data for the fortnight showed.

Household & personal products, hotels and restaurants, consumer durables and telecom services were among the other categories where FPIs invested anywhere between Rs 700 crore and Rs 800 crore in the first 15 days of the month.

In contrast, they dumped metals and mining shares to the tune of Rs 1,490 crore. Insurance was second on their ‘sell’ list. NBFCs (down Rs 792 crore), automobile (down 543 crore) and food and beverages (down 33 crore) also did not find favour with them.

“FPIs are always going to look at two things – one is global growth and how is it going to benefit India. Therefore, they be looking at global trends and then taking a call on Indian export plays like IT and pharma and global cyclicals like metals… “ Sunil Subramaniam, MD & CEO, Sundaram Mutual Fund, told ETNow.

FPIs’ asset under management (AUM) swelled 3.75 per cent during August first half to Rs 44.29 lakh crore. That growth was, however, slower than BSE Sensex’s 5.5 per cent rise during the same period.

Foreign brokerages are largely ‘overweight’ on export themes, such as IT and pharma, and find industrials and financials attractive. They have turned cautious on metals, much in line with FPIs.

Nomura India in its equity strategy said it is selectively overweight on exporters (IT, pharma, select exporters), domestic investment theme (industrials) and financials. It has stayed underweight on autos, consumer and cement, but is neutral on metals post the recent run-up.

BofA Securities said it is overweight on industrials, given its expectation of multi-year capex upcycle and financials on likely peaking credit costs and a pick-up in credit growth. Given that the rally in metals is likely nearing an end and Fed tapering could put pressure on commodities, the brokerage has cut materials to ‘underweight’ from ‘overweight’.

“With cautious a view on markets, we raise skew towards defensives in staples (from neutral), utilities and IT (overweight earlier) and maintain underweight on discretionary,” it said.

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