NEW DELHI: Foreign institutional investors or FIIs, which resumed their selling spree in September amid the twin fears of recession and rate hikes, dumped stocks worth over Rs 20,000 crore from 6 sectors – IT, oil and gas, metals, financials, realty and power.
Out of the six sectors where FII selling was over Rs 1,000 crore each, IT stocks faced most of the brunt with an outflow of nearly Rs 9,200 crore in September, shows NSDL data.
The impact of the FII selloff was visible on stock prices too. While the Sensex fell 3.5% during the month, the selloff was sharper in the BSE IT index, which declined almost 5%. On the other hand, BSE Power, BSE Metal, BSE Oil & Gas and BSE Realty declined between 6-9% each.
According to the data, FIIs sold equities worth Rs 4,410 crore in oil and gas, Rs 2,995 crore in metals and mining, Rs 1,673 crore in financial services, Rs 1,292 in realty and Rs 1,069 crore in power.
September marked a shift in FII spending pattern on Dalal Street as they were net buyers in all these six sectors in August. With a net investment of Rs 12,799 crore, financials were their top bet in August. IT and financial services are the two biggest holdings of FIIs in India.
As foreigners ended up being net sellers to the tune of Rs 7,624 crore in September, they bought stocks in FMCG, telecom, consumer services, capital goods and healthcare sectors.
Both FMCG and healthcare stocks have outperformed the market in the last month.
Besides macro worries, the FII flow this month is likely to be guided by the earnings season, which begins next week. Analysts expect profit growth to be healthy owing to strong top-line growth. “Low base is likely to aid strong growth in autos, industrials and consumer services, while financials and chemicals shall sustain their momentum. Meanwhile, earnings moderation is likely in IT, pharma, cement and durables,”
Securities said in a report.
In the second quarter,
estimates a 17% earnings decline due to decline of profits in the oil and gas sector.
“If you keep aside metals and oil and gas, for both our coverage universe and for the Nifty, we are expecting a solid 30% earnings growth,” Gautam Duggad of Motilal said.
Channel checks by domestic brokerage Prabhudas Lilladher suggest strong pent-up demand in the first normal festival season after two years.
Valuing Nifty at the last 10-year average PE of 20.5x on September 2024 EPS of Rs 1,016, the brokerage sees the index at 20,936 by September next year.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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