Foreign portfolio investors pull out Rs 11k cr from energy, finance, IT

Turn their attention to capital goods, construction, FMCG, consumer durables in March

Foreign portfolio investors (FPI) pulled out Rs 11,000 crore from energy, finance and information technology stocks in the second half of March.

Companies operating in the oil, gas and consumable fuels space saw selling worth Rs 4,524 crore, followed by financial services (Rs 3,346 crore) and IT (Rs 3,133 crore), according to data collated by Primeinfobase.

Auto (Rs 439 crore) and telecommunication (Rs 268 crore) were the other sectors where foreign investors sold shares. FPIs sold shares worth Rs 4,638 crore on a net basis in the second fortnight of March.

In the energy sector, the selling was largely in Reliance Industries (RIL). Reliance Industries declined as much as 9 per cent in March.
 

“For many of the big IT players, the financial sector accounts for a third of their revenues. The banking crisis in the western world could hurt them," said G Chokkalingam, founder of Equinomics, a Mumbai-based research and advisory firm.

Meanwhile, FPIs bought capital goods stocks worth Rs 1,731 crore, construction materials worth Rs 1,140 crore, and construction company shares worth Rs 1,199 crore. Shares of fast-moving consumer goods (FMCG) worth Rs 1,103 crore and consumer durables (Rs 850 crore) were the other buys during this period.

The focus on capital goods and construction was attributed to the government’s thrust on capital expenditure and the production-linked incentive schemes. FMCG stocks, meanwhile, were picked up as defensive buying.

"Still, volume growth (in FMCG) is in single digits. In a higher interest-hike scenario, FMCG is the best defensive sector. Maybe FPIs think the rate-hike cycle hasn't peaked," said Chokkalingam.

Despite the selling, the highest sectoral allocation was to financial services firms at 33.5 per cent, up from 33.07 per cent in the previous fortnight. IT (10.97 per cent) and energy (10.11 per cent) were the other sectors with high FPI allocation.