There are as many as 22 stocks on BSE where FIIs hold 40-70 percent stake. These include UPL, NIIT Technologies, HDFC Bank, Bharti Infratel, ICICI Bank and Mindtree
After pouring in Rs 60,000 crore in the Indian market in first four month of 2019, Foreign Institutional Investors (FIIs) have turned net sellers in May.
Experts suggest it is not wise to link the FII outflows just to the outcome of the elections, especially when there are signs of slowdown in the global economy and shrinking liquidity.
"FII flows depend on multiple factors - among them are global liquidity situation, stable government in India and economic growth," AK Prabhakar, Head -Research at IDBI Capital, told Moneycontrol.
“Added to that, we need a stable government if the reform process has to move forward. Growth in realty, auto and FMCG suggest that there is a general slowdown in the economy,” he said.
“FIIs are now booking some profit which is more due to US-China trade war and slowing growth in US, and less due to the general elections,” Atish Matlawala, Sr Analyst, SSJ Finance & Securities told Moneycontrol.
“However, if we look at quarterly results, it clearly indicates declining consumption amid the slowing economy. Fundamentally, markets are clearly overvalued and we do not expect much upside from this level. We, therefore, suggest investors to remain cautiously optimistic,” he said.
FII heavy stocks:
Well, if FIIs are turning net sellers, the first casualty would be the stocks that have high FII exposure or where foreign investors hold stake in double digits.
There are as many as 22 stocks on BSE where FIIs hold 40-70 percent stake. These include UPL, NIIT Technologies, HDFC Bank, Bharti Infratel, ICICI Bank, Mindtree, Birlasoft, Axis Bank, IndusInd Bank, Indiabulls Housing and HDFC.
Experts are naming global growth concerns as the reason for the sudden outflow. They say that any further selling could bring volatility in such stocks.
“It is difficult to presume the fall in blue-chip stocks in case FPI outflow intensifies but, yes, volatility can increase in these names,” Sumeet Bagadia, Executive Director, Choice Broking told Moneycontrol.
“Investors need not panic and are advised to remain invested in these blue-chip stocks like HDFC Bank, ICICI Bank, Axis Bank and IndusInd Bank,” he said.
Matlawala is of the view that HDFC, Axis Bank and ICICI Bank are good buys at current levels.
For Nifty, he estimates either around 5 percent upside from current levels to around 12,100/12,200 or chances of 10 to 15 percent correction on the downside.
Note: Above-mentioned stocks are not buy or sell ideas and are listed for information only.