India was the second most favoured country for foreign investors looking to invest in emerging markets across the globe. “Brazil, India and Indonesia saw notable FII inflows among the key emerging markets we track, while South Africa and Taiwan saw big outflows,” brokerage firm CLSA said in a note. Foreign Institutional Investors (FII) pumped in $2.4 billion into domestic markets during the previous month, turning net buyers after two consecutive months of outflows. FII money found its way into IT stocks, discretionary, healthcare and staples while pulling money out of banks, energy, industrials and utilities, CLSA said.
Foreign investors turned net buyers in June
Brazil was the top destination for foreign investors, pumping in $3.3 billion, followed by $2.4 billion into India and $0.3 billion to Indonesia. Foreign funds bought 8 basis points of India’s total market cap in June. Of the money flowing into India, non-India-dedicated ETFs infused$1.8 billion while non-India-dedicated active funds infused $0.1 billion, CLSA said. In the debt market, FIIs infused $0.6 billion. FII inflows came after two successive months of outflows from the domestic market. However, FIIs have once again turned net sellers during the first fortnight of July pulling $0.5 billion from stocks.
Cut stake in bank stocks, increase weight in IT sector
The largest role reversal was seen in FIIs pulling money away from banks and putting the same in IT stocks. “Active selling pulled down FII overweighting in banks by 75 basis points on-month to a multi-year low of 7.5 percentage points (ppts),” CLSA said in the note. In the month of May, FII 8.3 ppts stake in banks. Further, FIIs have cut their overweighting position in industrials by 43 basis points to a 14-month low of 1.3 ppt. Foreign investors instead used their money to buy more information technology stocks, increasing weightage by 87 basis points. “Banks, followed by discretionary, industrials and NBFC, remain the largest overweight sectors, while materials, energy, IT and staples were the biggest underweights in FII portfolios at the end of June 21,” the report said.
During the month of June, the Nifty 50 index gained 0.9% to reach 15,722. Nifty’s performance was better than major global peers such as the UK, Germany, China, Singapore, and Hong Kong. In terms of sectoral performance, IT and healthcare were the best-performing sectors during June. IT sector jumped 9.2%, followed by a 4.3% rally in healthcare stocks, FMCG, Realty and PSU were the other top performers. On the other hand, Metals, Oil & Gas, Power, and Banks were the worst-performing sectors in June.