Domestic institutional investors (DIIs) were the biggest buyers in the Indian equity market in June, contributing to a significant $9 billion net inflow, while foreign institutional investors (FIIs) were net sellers, selling $3 billion worth of stocks, accroding to a report by JM Financial Institutional.
Key Highlights
- DIIs bought $9 billion in Indian equities in June while FIIs sold $3 billion worth of shares.
- BFSI remained the top FII sector holding at 30.8% of AUC, followed by Capital Goods and Pharma.
FIIs Show a Split Personality: Bullish on IPOs, Bearish on Existing Stocks
The FII activity in the past 12 months has shown a significant difference between the market segments. FIIs pulled in net inflows of $8.1 billion in primary markets, where they are involved in fresh issuances such as IPOs, as they continue to show interest in new-age businesses and quality listings. The secondary markets, where already listed stocks are traded, saw massive FII net outflows of $49.3 billion. The difference here indicates that foreign investors are still enthusiastic about investing in new deals at the IPO stage, but have significantly become more conservative about buying or further adding to their portfolio of already listed Indian stocks, perhaps because of valuation concerns and/or a general re-allocation toward other emerging markets.
BFSI, Capital Goods, Pharma Anchor FII Sector Holdings
Five sectors - BFSI, Capital Goods, Pharma, Auto and Oil & Gas - had bulk of foreign portfolio investment (FPI) assets in India in June, confirming their position as the pillars of foreign portfolio exposure. In the group, shareholding pattern was mixed – FIIs were net buyers in BFSI and Pharma indicating renewed interest in banking, financial services and healthcare stocks while it became investors' net sellers in Capital Goods, Auto and Oil & Gas, indicating that some investors are unwinding or profit taking in cyclical and commodity-driven stocks.
Also Read: FPI Outflows Hit Rs 49,340 Crore from Indian Equities in June
BFSI Widens Its Lead in FII Asset Allocation
As a proportion of FII assets under custody (AUC) in India, BFSI strengthened its position as the largest sectoral holding, rising to 30.8% from 29.5% in May. Capital Goods held on to second place at 7.5%, edging down marginally from 7.6%, while Pharma climbed to third at 7.4%, up from 7.1% - reinforcing pharma's growing appeal among foreign portfolio managers.
Sector-Wise Inflows Paint a Broader Picture
Looking at absolute dollar inflows for June, BFSI again led with $357 million, followed by durables at $204 million, services at $130 million, and realty at $85 million - sectors that appear to be attracting fresh foreign capital even as the broader FII trend remains one of net selling.
