Financial services, power, capital goods and automobile drive FPI interest in equities

Banking & financial services, capital goods and automobiles were the favourite sectors of investment for foreign investors in the first five months of the current fiscal. 

According to National Securities Depository Ltd (NSDL) data, foreign portfolio investors (FPIs) infused ₹49,086 crore into the banking and financial services sector during the April-August period. It was followed by capital goods and automobile sectors, which received ₹23,914 crore and ₹20,692 crore of foreign funds, respectively. 

“The Indian automobiles sector is staging a comeback after poor performance for around five years. The passenger vehicle segment is doing well and the commercial vehicle segment is recovering. The EV segment of companies like Tata Motors are doing well,” said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services. 

“This is attracting a lot of investment into the sector from domestic institutional investors, foreign institutional Investors and retail investors. This explains the excellent performance of the auto index, which has delivered 26.68 per cent year-to-date,” he added. 

It is to be noted that while FPIs have been net buyers in the financial services, automobile, and capital goods sector since the beginning of the current fiscal, they, however, turned net sellers in the financial services in August pulling out ₹6,493 crore from the sector. Market experts attribute the outflow from the banking sector to ‘profit booking’. 

Power demand

In August, FPIs allocated their highest investment to the power sector with an inflow of ₹11,563 crore, which was followed by capital goods ₹8,337 crore and Information Technology (₹4,088 crore). 

According to market experts, the allocation to the power sector included US-based GQG’s $1.1 billion investment in Adani Power. In early August, GQG Partners Emerging Market Fund, Goldman Sachs GQG Partners International and a few other foreign investors picked up 8.1 per cent stake in Adani Power for $1.1 billion. 

Besides, the surge in India’s power demand is also one of the reasons that piqued FPI interest in the sector. According to the Power Ministry, India’s electricity demand rose to an all-time high of 234 GW on August 17.