By Bharath Rajeswaran
– Foreign outflows from Indian equity markets moderated in November after these investors turned buyers in the second-half of the month, snapping a record 38-session selling streak.
Last month, foreign portfolio investors (FPI) poured money mainly into financials and IT stocks, which brought down outflows to $2.55 billion from a record $11.2 billion in October, National Securities Depository data showed on Thursday.
That coincided with the Indian benchmarks slipping into correction territory in November, 10% below the record highs they hit on Sept. 27.
The benchmarks, have, however, recouped some losses in the last three weeks, with the Nifty 50 currently down about 6% from its all-time high.
“There is clearly some value in Indian markets after the recent drop, and FPIs will return to India in a few months if domestic corporate earnings and economic growth see an improvement,” said Nilesh Shah, managing director of Kotak Mahindra Asset Management Company.
FPIs bought financials worth about $300 million in November, helped by inflows in the second-half of the month. These investors took out $3.1 billion from the sector in October, the second-highest monthly sales on record.
Global indexes provider MSCI also raised the weightage of top private lender HDFC Bank in their index rejig last month, which potentially triggered foreign inflows in the sector, according to analysts.
Meanwhile, IT companies, which earn a significant share of their revenue from the U.S., reported FPI inflows of $650 million in November.
A strong U.S. economy and expectations of lower corporate tax rates after Donald Trump’s U.S. presidential victory prompted foreign interest in the IT sector, analysts said.
Financials gained 0.5%, while IT stocks jumped about 7% in November.
While FPIs turned net buyers of IT and financial stocks, they continued to sell oil and gas, auto and telecom shares in November.
($1 = 84.7230 Indian rupees)
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Sonia Cheema)
