Sector-wise, FPIs bought into financials (non-banking financial companies and private bank), IT and metals and sold autos, utilities, state-run banks, energy and consumer staples.Foreign institutional investors (FIIs) have turned cautious on Indian equities in 2018 due to increasing commodity prices, rise in US treasury yields, strengthening dollar-rupee, deteriorating macro-economic parameters and fluid political environment.
So far, FIIs have withdrawn over Rs 7,000 crore and nearly Rs 17,000 crore from equity and debt markets in May, respectively, according to data from Securities and Exchange Board of India. FIIs have turned net sellers in February, April and May.
Rising borrowing costs in the US, amid appreciation of the dollar-rupee, has put emerging market assets under pressure and will cap foreign portfolio investor flows into emerging markets, including India, Elara Securities said in a report. “Given the high valuation, weak corporate earnings and macro headwinds, we expect FPI equity flows to remain weak in Q1 FY19.”
In the quarter-ended March, FPIs remained net buyers of Indian equities to the tune of $2 billion as compared to $2.5 billion quarter-on-quarter. The net buying was largely due to participation in the primary issuance (qualified institutional placement, rights, preferential issuance) of Housing Development Finance Corporation (HDFC), Tata Steel and Idea Cellular.
The quarter also saw a reversal in FPI buying momentum (two consecutive quarters of buying followed by a quarter of selling) in M&M Financial Services, Idea Cellular, RBL Bank, Hindalco, Crompton Consumer, Torrent Pharma, among others, the report stated.