While Foreign Portfolio Investors (FPI) have sold more and more equities so far this year amid a global sell-off that has seen global markets tank, Mutual Funds (MF) have mobilised higher funds in mid-cap and small-cap schemes.
While Foreign Portfolio Investors (FPI) have sold more and more equities so far this year amid a global sell-off that has seen global markets tank, Mutual Funds (MF) have mobilised higher funds in mid-cap and small-cap schemes said a report by ICICI Securities. In February 2020, FPIs bought selectively, picking retail and energy their biggest bets with Rs 2,400 crore and Rs 1,300 crore investment respectively. While the consumer staples were a big no-no for FPIs with Rs 3,000 crore being withdrawn from the sector. On the other hand, MFs stayed away from the IT sector selling Rs 1,200 crore equities and invested heavily Rs 2,800 crore in private banks.
“Within size segments, buying by mutual funds was largely focused towards large-caps Rs 13,400 crore although mid-cap (Rs 2,600 crore) and small-caps (Rs 1,600 crore) also witnessed buying. MF’s continued to mobilise higher funds in mid and small-cap schemes during February 2020,” said ICICI Securities. MFs and Domestic Institutional Investors (DII) have ramped up their investments as FPIs looked to exit. The brokerage noted that spike in Covid-19 (Coronavirus) cases remains a key risk to FPI flows.
While energy and retail are the two sectors that both FPIs and MFs invested heavily in February 2020, consumer staples that were dumped by FPIs were among the biggest buys for MFs, with total investment touching Rs 2,700 crore. Similarly, the auto sector was dumped by FPIs but not by MFs. ICICI Securities said, “Net oil import status and low incidence of COVID-19 (Coronavirus) in India so far (with government efforts at containment and summer heat catching up) should improve the outlook of active global fund managers towards India on a relative basis.”
While stocks continue to be battered as fear of Coronavirus mount, fundamentally sound value stocks are approaching their tipping point in terms of higher cash flow, the report said. “A combination of low quality and low earnings yield is the most vulnerable factor in the current sell-off,” warned ICICI Securities.