Financial Sector Frenzy: The Sectors FPIs Can’t Resist – or Can They?
Kotak Insights | Date 23/11/2024
Picture this: it’s a crisp autumn morning in Mumbai, the city where the first whispers of India’s stock market began to echo through the bustling streets.
Foreign Portfolio Investors (FPIs) are arriving, seeking opportunities, and always on the lookout for the next big thing.
It’s a game of cat and mouse—FPIs chase yields while traders track every tick of the market.
Over the past few months, though, things have gotten a bit tricky for FPIs.
They’ve yanked ₹13,401 crore out of India’s stock market so far this year. The indices? A nose-dive—down by 8-9%. So, what’s going on?
Let’s talk sectors—those sneaky players in India’s finance game. Take the financial sector. It was once the FPI darling. Now? They’re pulling out $3.1 billion. Why? The reason’s just as chilly.
Banks and financial institutions, once FPI favourites are now in a slump.
Loan disbursements are sluggish, while deposits keep rising—FPIs aren’t buying that paradox.
And those shrinking bank margins?
They’re like a deflating tyre on a hot Mumbai day.
The September earnings report? A disaster.
Profits tanked, costs soared, and investors bailed like tourists at a packed station.
What’s behind this FPI cold shoulder?
Look at the global stage.
US bond yields are pulling foreign money like a game of musical chairs. And the US elections? Just adding to the chaos.
Geopolitical tensions—especially between Israel and Iran—are shaking up the oil and gas markets.
FPIs, like sailors in a storm, are steering clear.
Let’s talk FMCG. It was a top pick for FPIs, but now, they’ve pulled out ₹11,582 crore faster than you can say “Maggi noodles.”
Urban spending, which fuels two-thirds of FMCG sales, is slipping like an ice cube on a packed Bombay beach.
And food inflation? It shot up from 5.4% to 9.2%, leaving investors wondering if they’ve bitten off more than they can chew.
But wait, what’s that gleaming in the chaos? Healthcare.
Amid all the red ink, it’s the sector that’s quietly shining.
FPIs are pouring money in with the regularity of morning tea in a British home.
September saw ₹6,639 crore in inflows, August had ₹5,831 crore, and July wasn’t far behind with ₹5,054 crore.
The draw?
₹89,287 crore for digital healthcare in the Union Budget.
Add a ₹50,000 crore incentive program, and FPIs are snapping up healthcare stocks like shoppers at a Black Friday sale.
Craving the unconventional?
Chemicals pulled in ₹552 crore from FPIs in October.
Metals and mining snagged ₹222 crore.
Utilities got a modest ₹127 crore.
It’s like a magician shifting money between hats—disappearing from one, reappearing in another.
Autos and components? Slammed.
FPIs pulled out ₹10,440 crore in a month.
A slowing economy, stricter rules, and ride-sharing apps have muddied the view ahead. No surprise they’re taking a detour.
Oil and gas? Another bruised player.
FPIs burned ₹21,444 crore there recently.
But with crude prices spiking like Everest after a storm, they’re bolting.
Geopolitical chaos only fuels the fire, and FPIs know when to hit eject.
So, what’s the takeaway?
It’s a whirlwind of exits, entries, and possibilities.
FPIs are ditching financials, FMCG, and oil faster than you can say “market meltdown.”
But healthcare, chemicals, and metals? They’re catching a second glance.
For traders, it’s game on.
A storm’s brewing, and the FPIs are shifting gears.
Stay sharp.
The stock market’s saga rolls on, with FPIs playing hide-and-seek—never where you expect them to be.
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Sources and References:
The above images were generated using AI.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.
Investments in securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262.
