FPIs invest over ₹36,000 crore in Indian equities in November – Financial services is top favourite

• Foreign portfolio investors (FPI) continued to be bullish on the financial services sector, according to data for the second fortnight of November.
  
• Overall, FPIs were net buyers in the equity segment with an investment of ₹7,350 crore during the period.
  
• Other sectors which witnessed healthy inflows during the period were consumer services, capital goods, oil & gas, and IT.
  

Inflows from foreign portfolio investors (FPIs) for the second half of November dropped by almost three-quarters compared to the first half of the month. However, the financial services sector continued to be the FPI favourite, attracting ₹2,753 crore, or a little over 37% of their net equity investments during the period.

Total FPI investments in the second half slumped to ₹7,350 crore from ₹28,888 crore seen in the first half of November, when financial services was the top buy too.

Overall, in November, FPIs invested ₹36,238 crore into Indian equities, with the financial services sector alone accounting for ₹14,205 crore. So far this year, FPI flows have been positive only in three out of nine months. Overall, FPIs withdrew ₹1.32 lakh crore from equities in this period.

While FPIs continued to remain bullish on the financial services sector, consumer services and capital goods sectors were their next top buys in the second half of November, with investments of ₹1,157 crore and ₹1,098 crore, respectively.

However, in October, FPIs had withdrawn ₹4,686 crore from the financial services sector.

Sector	FPI flows
Financial Services	₹2,753 cr
Consumer Services	₹1,157 cr
Capital Goods	₹1,098 cr
Oil, Gas & Consumable Fuels	₹1,009 cr
IT	₹854 cr
Others	₹479 cr
Total	₹7,350 cr

Source: NSDL, November 16-30, 2022 | FPI flows in equity segment

In terms of assets under custody, financial services remained the top pick of FPIs, accounting for 32% of the total investments worth ₹49.86 lakh crore in the equity segment for the second half of November.

Sectors	Assets under custody
Financial Services	32%
Oil, Gas & Consumable Fuels	12%
IT	11%
FMCG	7%
Auto and auto components	5%
Others	33%

Source: NSDL, November 16-30, 2022 | AUC in equity segment

In this period, the benchmark Nifty50 index gained 1.93% while the Sensex rose 1.98%.

Aided by flows from FPIs, the Nifty Bank index was amongst the best sectoral performers with gains of 2%, but more specifically, the PSU bank index gained 6.36%.

Bank	Change in share price (Nov 15-30)
Punjab National Bank	16.72%
Axis Bank	4.96%
ICICI Bank	4.52%
Bandhan Bank	4.20%
IDFC First Bank	2.54%
Bank of Baroda	2.03%
Kotak Mahindra Bank	1.81%
IndusInd Bank	1.30%
AU Small Finance Bank	0.85%
State Bank of India	0.27%
HDFC Bank	-0.65%
Federal Bank	-3.42%

Source: NSE

Payment volumes and loan growth continue to remain strong

While banks have benefited from the repo rate hikes this year, banking, financial and insurance services (BFSI) stocks have also been aided by strong payment volumes and loan growth in November, according to a report by Kotak Institutional Equities.

“Daily payments data for November 2022 from RBI (Reserve Bank of India) indicates strong trends in payments, although there was a sequential decline – partly on account of the high base of the festive season and partly on account of fewer days in the month,” the report said.

ICICI Bank, which emerged as one of the top gainers in the second half of November in the banking sector, has received bullish recommendations and target price upgrades from major research firms.

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