BENGALURU – Foreign portfolio investors (FPI) turned net buyers of Indian stocks in February, adding 15.39 billion rupees (~$186 million) led by inflows into auto and pharma, data from the National Securities Depository Ltd (NDSL) showed, while weightage hike in a key MSCI index also aided sentiment.
The benchmark indexes Nifty 50 and BSE Sensex , which were little changed in January amid foreign outflows, gained more than 1% last month on FPI buying and robust domestic inflows.
FPI inflows are likely to increase further due to India’s rising share in the MSCI Emerging Markets index, CLSA said in a note.
India narrowed the gap with China in MSCI’s Global Standard index, which tracks emerging market stocks for investors, after the latest revision.
Index provider MSCI raised India’s weightage to an all-time high of 18.2%, which came into effect at the end of February.
India could witness up to $1.2 billion of passive foreign flows after the MSCI February review, Nuvama Alternative and Quantitative Research said in a note.
FPIs have bought shares worth 63.60 billion rupees so far in March after data showed faster-than-expected economic growth in the October-December quarter.
“It is crucial to acknowledge the strong macroeconomic, corporate fundamentals and macro stability that underpin India’s equity markets and their valuations,” said Mike Shiao, chief investment officer, Asia ex-Japan at Invesco.
Among individual sectors, auto and pharma stocks saw buying interest, while foreign selling continued in financials.
FPIs have offloaded financial services shares worth about 400 billion rupees in the first two months of 2024, triggering a 5% drop in the financials index over the same period.
