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Despite contrasting FPI and DII trend, Nifty clocks fastest gains since FY10: ICICI Securities

The brokerage firm pointed out that unlike the FY10 rally, when DIIs also contributed to positive flows along with the high level of FPI inflows, the current rally has seen consistently opposite flows from FPIs and DIIs.

January 08, 2021 / 10:53 AM IST

Despite a contrasting trend in foreign portfolio investments (FPIs) and domestic institutional investors (DIIs), the Indian market benchmark Nifty galloped at its fastest pace since FY10, a note from brokerage firm ICICI Securities said.

"On a rolling nine-month basis, the Nifty50 index (up 86 percent) is close to exhibiting the fastest rally since FY10 when it gained 103 percent in a similar timeframe," ICICI Securities said.

The brokerage firm pointed out that unlike the FY10 rally, where DIIs also contributed to positive flows along with the high level of FPI inflows, the current rally has seen consistently opposite flows from FPIs and DIIs.

Nevertheless, mutual funds (MFs) did contribute to outflows during FY10 and, overall, DIIs contributed positively, ICICI Securities said.

"Faster than expected pickup in aggregate demand going ahead could make it a consensus buy for both FPIs and DIIs, thereby further fuelling the bull- market rally," ICICI said.

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However, the brokerage added that the drivers of near-term aggregate demand remain weak in the form of household spending driven by weak consumer sentiment, fiscal constraints on government spending, and corporates cutting back on CAPEX and OPEX.

"Valuations stretched at +1 SD on forward PE and CAPE basis. However, on PB basis it is reasonably valued close to the long-term average," ICICI Securities said.

Bharti Airtel, HCL Technologies, Axis Bank, NTPC, SBI Life, Shree Cement, ICICI Lombard, Abbott India, Balkrishna Inds., TVS Motors, Akzo Nobel, Prince Pipes and Somany Ceramics are the top picks of the brokerage.

For December 2020, as per the brokerage, outperformance in stock prices was observed in high beta stocks (realty, PSU banks, metal, and consumer durables) and sectors such as IT, telecom, and pharma.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Jan 8, 2021 10:53 am

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