Financial, energy stocks saw highest FPI selling at over $1.5 bn in April

FMCG, real estate, IT report positive flows

Stocks in the financials, oil & gas and metals sector have borne the maximum brunt of selling by overseas investors in April.

 

Last month, foreign portfolio investors (FPIs) pulled out $1.29 billion from domestic stocks—highest monthly selloff since March 2020 when the pandemic first took hold.

 

Banks and financial stocks saw the highest pullout at $1.12 billion followed by oil and gas ($466 million) and metals ($242 million).

 

“As the nation’s worldwide are enjoying a steady relaxation of virus restrictions, India is in the grip of arguably the single most violent and overwhelming outbreak the world has seen. This has resulted in FPIs snapping their six-month buying spree, as they turned net sellers in April. This month’s FPI flows will again depend upon the countrywide restrictions, business activities, ensuing Q4FY21 result season and management commentary for coming months,” said Abhilash Pagaria, analyst at Edelweiss Securities.

 

Stocks in the automobile cement and capital goods also saw selling by overseas investors as states announced lockdown-like measures to halt the spread of the virus.

 

“Mirroring the market mood, inflows into cyclicals took a breather in April as FPIs turned net sellers in capital goods, cement and construction,” said Sriram Velayudhan, vice-president at IIFL Securities.

 

Following the selloff, the weightage of banks and financial stocks in FPI portfolio has hit a six-month low of 32.7 per cent. During the start of the year, the weightage was 34.9 per cent, shows an analysis by Edelweiss Securities. The pruning of exposure by FPIs has weighed on the performance of financial stocks this year. The Nifty Financial Services index has gained 3 per cent year to date, while the Nifty is up 5 per cent.

 

FMCG, real estate and information technology (IT), on the other hand, saw positive inflows of over $200 million each. Besides these three, power and telecom were the two other sectors to see positive flows.

 

Despite sharp selling by FPIs, the markets ended the month largely flat thanks to buying support provided by domestic institutional investors (DIIs).

 

“The cash rich local institutions made net purchases of about $1.48 billion in April, buffering $1.3 billion of net outflows from foreign investors. Thus, strong support from the DIIs and high networth individuals helped Nifty during the volatile month of April,” said Pagaria.