Markets

FPIs increase exposure in banking and financial stocks

 

Foreign portfolio investors (FPIs) have increased their exposure in banking and financial stocks in the 30 days between May 16 and June 15 after being net sellers in the sector since the beginning of the current fiscal.

According to the latest data available with depositories, foreign investors have pumped in ₹10,806 crore in the financial services sector between May 16 and June 15, 2021. Of the total inflows, ₹8,830 crore went into bank stocks while ₹1,976 crore went into ‘other financial services’ including NBFCs, HFCs and FIs.

Prior to this, FPIs have been net sellers in the financial sector pulling out ₹10,266 crore between April 1 and May 15.

NPA concerns

“Banking stocks have been underperforming this year. The underperformance has been bigger in the last 3 months with the Nifty appreciating by 7.3% and Bank Nifty languishing with only 2.07% appreciation. This underperformance has been mainly on potential NPA concerns which got aggravated following the second wave of the pandemic,” said VK Vijayakumar, Chief investment Strategist at Geojit Financial Services.

“But now the indications are that NPAs will not be as bad as initially feared. Also, segments like housing finance and private sector insurance are doing well,” he added.

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FPIs have been net sellers of Indian equities in the first two months of the current fiscal collectively pulling out over ₹12,000 crore. However, foreign investors turned net buyers in June, infusing ₹15,312 crore as on Friday.

Oil & Gas sector is the other major recipient of FPI inflows which netted around ₹4,700 crore in the first fortnight of June.

“The US, China and India— the three main oil-guzzling countries— are coming out of Covid, which has improved the global crude oil demand. The crude oil consumption is expected to reach the normal level of 100 million barrels per day by 2022,” Vinit Bolinjkar, Head of Research at Ventura Securities said, adding, “We believe that oil prices are expected to remain firm, which will improve the fundamentals of E&P companies. That’s why institutional investors are bullish on the Oil & Gas sector.”

 

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