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Banking, fin services, energy & IT see massive FPI offloading

FPI outflow from energy stocks was Rs 4,400 crore while from NBFCs was Rs 3,900 crore.

, ET Bureau|
Last Updated: Mar 30, 2020, 09.02 AM IST
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Foreign portfolio investors (FPI) have sold shares of banks, financial services, energy and IT in the first fortnight of March, according to data from the National Securities Depository (NSDL). Nearly 75% of the FPI outflow from Indian equities during March 1-15 was from these four sectors. FPIs have sold shares worth Rs 25,000 crore between March1and 15 and the outflow is likely to continue in the near term due to redemption in arbitrage funds and impositions of dividend tax from April 1, said fund managers.

“Post surge in FPI net equity outflows, a key risk for markets is outflows from arbitrage funds given poor returns over the last six months of just 2.5% coupled with higher dividend tax implications starting April 20, the attractiveness diminishes relative to fixed deposits,” said Rajiv Batra, chief Southeast Asia equity strategist, JP Morgan. “Arbitrage funds’ AUM as of February 20 is at Rs 85,000 crore.”

FPIs have sold shares worth Rs 7,500 crore from banking stocks during March 1-15. Given the events unfolding in the domestic and global financial system on the back of the Covid-19 outbreak and an outlook of slowing global growth, analysts expect slower growth for banks. “The lockdown of the domestic and global economies due to the Covid-19 threat will have a meaningful impact on Indian banks’ loan-book growth,” said Manish Agarwalla, analyst, Phillip Capital.

FPI snip 1

FPI outflow from energy stocks was Rs 4,400 crore while from NBFCs was Rs 3,900 crore.

However, FPIs have increased their stake in consumer discretionary, media and chemicals.
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