FPIs' defensive mood in August hints at sectoral flows

Foreign portfolio investors (FPIs) seem to be turning defensive after a relentless run this year. In August, they invested the highest sum into fast moving consumer goods (FMCG) stocks, while yanking out money from high-beta sectors such as auto and banking. In the past three months, FMCG stocks have cornered the highest FPI flows at $1.7 billion, as per an analysis by IIFL Alternative Research. “In terms of positioning in August, FPIs turned cautious as they were buyers across most of the defensive sectors,” said Sriram Velayudhan, vice-president at the firm. Oil & gas, power

Construction and telecom were some other sectors that saw positive foreign flows in August. On the other hand, auto, capital goods, banks & financials and metals saw a pullback in terms of FPI flows. Currently, FPIs have the highest allocation to financial stocks at 31.8 per cent, followed by information technology (IT) at 14.67 per cent. The allocation to the IT sector is up 129 basis points (bps) this year, while the allocation to banks and financials is down 305 bps.