Growing interest: FMCG, telcos on foreign portfolio investors hot list

Analysts said large part of the flows into the FMCG sector were due to the block deal in ITC, where the British American Tobacco (BAT) sold a 3.5 per cent stake for around Rs 17,000 crore

Foreign portfolio investors (FPI) poured nearly Rs 30,000 crore in stocks of fast-moving consumer goods (FMCG), telecommunications, financial services and services sector during the first half of this month.

The FMCG sector saw buying worth Rs 11,180 crore followed by telecommunication at Rs 6,648 crore, according to data collated by Primeinfobase.

 

But analysts said that a large part of the flows into the FMCG sector were due to the block deal in ITC, where the British American Tobacco (BAT) sold a 3.5 per cent stake for around Rs 17,000 crore.

If not ITC, the inflows into the sector would have been negative. Analysts said the FMCG sector is facing tough times due to stagnating rural demand.

“We expect meaningful volume growth recovery to take a few more quarters. Input cost moderation continues to drive recovery in gross margins for most FMCG companies, which is partly being reinvested in ad spending,” said a note from ICICI Securities.

Chookalingam. G, founder of Equinomics, said that defensives are not doing well except in the pharma sector. 

“IT and FMCG sectors are growing in single digits. Rural demand has slowed down, visible in tractor and FMCG sales,” he said. 

Meanwhile, healthcare stocks saw selling worth Rs 1,577 crore, oil, gas and consumables worth Rs 1,110 crore, and information technology stocks Rs 1,104 crore. FPIs also sold construction company stocks worth Rs 271 crore and consumer durables worth Rs 167 crore.

Overall, FPIs were net buyers of equities worth Rs 40,708 crore in the first fortnight of March.

The highest sectoral allocation of FPI investments in the first half of March 15, 2024, was in financial services, at 29.2 per cent, up from 28.79 per cent at the end of February.

Information technology stocks had the second highest sectoral allocation, though their allocation was reduced by 10 basis points after the latest selling. Oil and gas stocks saw a decline in FPI holdings from 9.5 per cent at the end of February to 9.24 per cent in March.