Foreign portfolio investor moves swing stock price pendulum, shows data

Stocks in which foreign portfolio investors (FPIs) increased their holdings rallied the most, compared to stocks where other classes of investors such as retail, insurance, and mutual funds raised their stakes.
 

According to an analysis by Primeinfobase.com, FPIs increased their shareholding in 687 National Stock Exchange-listed companies during the three months ending in June 2023.
 

The average stock price gain for these companies was nearly 30 per cent during the quarter, compared to a 13 per cent gain in the Nifty 500. Meanwhile, the average stock price gain for the 908 companies where retail shareholders increased their stakes was about 21 per cent.

The lowest growth was observed in the 50 stocks where Life Insurance Corporation of India raised its stake by just 12 per cent. In the case of 885 companies where retail investors pruned their holdings, stock prices rose by 28 per cent. Simultaneously, in the case of 608 stocks where FPIs trimmed their exposure, stock prices rose by 21 per cent.
 

The comparison of shareholding and price changes highlights that overseas investors have the most significant impact on stock prices.Between April and June, FPIs infused nearly Rs. 1.1 trillion into domestic stocks. 

They invested around Rs. 44,000 crore in stocks in the financial services sector and Rs. 16,818 crore in the automotive sector.
However, FPIs withdrew Rs. 9,376 crore from information technology (IT) stocks during the quarter, as reported by Primeinfobase.com.
 

During the April-June 2023-24 quarter, the Nifty Financial Services and the Nifty Auto indices rose by 11 per cent and 23.7 per cent, respectively, while the Nifty IT rose by 3 per cent.