Foreign investors have turned increasingly interested in Indian equities, despite volatility in the market, concern over high valuations, protracted high rate regime, and escalating geopolitical crisis.
The foreign institutional investors (FIIs) seem to have zeroed in on sectors like power, financial services, consumer goods, automotive, and telecommunications. They have picked up Rs 5,143-crore shares in the power sector in the first two weeks of April, marking their largest buying spree since August 2023. Analysts attribute this move to the soaring mercury, prompting investors to add power-related stocks to their portfolios for anticipated earnings growth. This surge in demand is expected to drive record-high power consumption, boosting earnings visibility for power-related stocks, they said.
The FIIs made substantial investments in the financial services sector at Rs 3,212 crore, consumer services sector at Rs 1,713 crore, and automotive and telecommunications sectors at Rs 1,660 crore each.
Conversely, the FIIs divested from information technology and FMCG stocks. They pulled out Rs 4,658 crore from the IT sector, following a withdrawal of Rs 1,659 crore in March. Additionally, FIIs offloaded FMCG shares worth Rs 4,351 crore.
IT stocks under pressure after weaker earnings. Accenture recently revised its FY24 revenue guidance to 1-3 percent year-on-year, citing delayed decisions and weak spending. Infosys reported Q4 revenue decline and modest FY25 growth forecast. Wipro forecasts bleak revenue growth for the June quarter after a challenging year with declining revenue, profit, and headcount. Sequential revenue growth remained flat amid continued pressure on discretionary spending.
FMCG stocks faced pressure as analysts forecast a dull Q4 due to slow rural growth, delayed winter, and tough competition. Elara Capital predicts single-digit growth for the sector. Regional players in biscuits and laundry challenge big firms due to favourable commodity prices. Hindustan Unilever and Britannia Industries feel the heat. Phillip Capital expects improved margins, but not all will translate to higher EBITDA due to increased advertising spend.
FIIs were observed selling shares in sectors such as consumer durables at Rs 1,624 crore, oil and gas at Rs 923 crore, and construction at Rs 704 crore.
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