Foreign portfolio investors (FPIs), after being net purchasers in four consecutive months, which extended to July 10, reversed positions and net sold shares worth $3.2 billion during the rest of the month. Of the $2.9-billion net selloff in July, IT shares accounted for $2.3 billion, a staggering 80%.
“The (IT) sector is likely to stagnate because of the Trump noise. The artificial intelligence (AI) impact on IT jobs is also worrying,” said Nikunj Doshi, managing partner at Bay Capital, which has a $750-million FPI fund investing in India.
Market expectation on India-US trade deal
While DII investment is being steadily absorbed in the market, intense selling from FPIs continued in August. FPIs were net sellers of more than ₹6,000 crore this month, of which ₹4,999 crore was on August 6.
“So far, the market seems to be complacent thinking that India-US trade deal may eventually be negotiated to a lower level. Back door government-to-government interactions among BRIC nations suggest no immediate resolution,” said Utsav Verma, head of research, institutional equities at Choice Broking.
BFSI, auto, and realty recorded outflows
Sectors that saw outflows in July include BSFI ($671mn), realty ($450mn) and auto ($412mn). FPIs net purchased metals ($388mn), services ($347mn) and FMCG ($175mn). Domestic institutions (DIIs), in a continuing trend, were net buyers of $7.1 billion. The National Stock Exchange’s Nifty fell 3% in July, after 3.1% rise in June.
Top sectoral holdings remain unchanged, with BFSI, IT, Oil & Gas, auto and pharma accounting 60% of FPI assets in India. “Of these, we saw a marginal sequential uptrend in pharma and auto, while IT and O&G saw a decrease,” said analysts at JM Financial Institutional Securities.