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On Wednesday, foreign investors, prime movers of Indian equities, turned sellers for a consecutive day. According to the provisional data, foreign institutional investors (FIIs) net-sold shares worth Rs 266 crore, double the amount they net-sold on Tuesday. In the past two days, they net-sold shares worth Rs 370 crore.
Market participants said the selling wasn't much of a worry. “FIIs had been buying into the market right from the 5,800 (Nifty)-levels. Given the rally we have seen from those levels, FIIs would look at taking some money off the table,” said Mayuresh Joshi, head of institutional sales at Angel Broking. “Now, that the (electoral) mandate has been in favour of what the markets expected, we could see some more profit-booking.”
On Wednesday, the BSE Sensex was down 0.3 per cent to 24,298, while the National Stock Exchange’s Nifty closed at 7,252, down 0.3 per cent.
Since January, equity markets had seen a sharp run-up, as markets hoped for a stable, growth-oriented government at the Centre. Indian markets, among the top performers in the Asian region, have gained about 15 per cent since the beginning of the year.
Analysts said after the May 16 poll outcome, FIIs had been paring exposure to last year’s favourite defensive sectors such as information technology (IT), pharmaceuticals and fast moving consumer goods (FMCG). On Wednesday, the BSE IT and FMCG sectors were gainers at 0.8 and 0.6 per cent, respectively.
On the other hand, FIIs have been actively buying into stocks of high-beta sectors like capital goods, infrastructure and banking, said analysts. The BSE Capital Goods and Bankex indices were down 1.6 and one per cent, respectively.
Analysts said apart from profit booking, investors were re-aligning portfolios to increase exposure to attractively valued mid-caps.
While market players remain unperturbed about the FII-selling, they said that the quantum of FII-buying is unlikely to see an upward revision anytime soon. Further boost in FII-buying is now hinged on the new policies of the government, the Cabinet formation, the Budget and the key bills to be passed by the new government.
