FPIs pump ₹9,677 crore into financial services and auto stocks in April

• Foreign portfolio investors (FPIs) started FY24 on a positive note as they invested ₹9,677 crore in financial services and auto stocks in April.
  
• Overall, FPIs pumped in ₹11,629 crore in Indian equities during the month, with 16 out of the 24 sectors witnessing inflows.
  
• The trend of positive FPI flows has gained even more momentum in May, with net equity investments standing at ₹14,703 crore this month so far.
  

Foreign portfolio investors (FPI) have started FY24 on a positive note, with strong inflows observed in financial services and auto stocks in April. Together, these two sectors witnessed inflows of ₹9,677 crore during the month.

Overall, FPIs were net buyers in Indian equities in April, extending their purchases from the previous month. Their net investments in Indian equities stood at ₹11,629 crore. All in all, 16 out of 24 sectors witnessed inflows during the month, while five sectors witnessed outflows and one sector remained flat.

The trend of positive FPI flows has gained even more momentum in May, with net equity investments standing at ₹14,703 crore this month so far.

“India outperformed most markets in April. The principal reason for the outperformance is the sustained buying by FPIs,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.


Indian equity markets roared in April after experiencing high volatility in March. During the month, the Nifty50 index surged 4.1% while Sensex gained 3.6%. The financial services index outperformed Nifty50 with gains of 4.4%, while Nifty Bank rose 6.5% and Nifty Auto index gained 7.7% in April.

Apart from the strong FPI inflows, robust economic data like GST collections and manufacturing purchasing manager’s index (PMI) also helped.

GST collections during April stood at ₹1.87 lakh crore, the highest-ever since the rollout of the indirect tax regime. Manufacturing PMI came in at 57.2, hitting a four-month high.

“FPIs are likely to continue buying in India. The appreciation in rupee and good Q4 results will aid increasing capital flows to India,” Vijayakumar added.

FPIs remain wary about the IT sector

The Indian IT sector continues to make FPIs wary, resulting in the second consecutive month of outflows at ₹4,908 crore.

Interestingly, the first half of April saw FPIs pour in ₹1,002 crore in the IT sector, but they turned bearish once the Q4 earnings started pouring in, resulting in an outflow of ₹5,910 crore in the second half of the month. In 2023 so far, FPIs have pulled out ₹12,886 crore from the IT sector.

Mixed performance in Q4 and weaker outlook for the year ahead, has contributed to the sell-off. The Nifty IT pack fell 3.5% during April while the broader Nifty50 index gained 4.1%.

Amongst the top losers in the Nifty IT pack are Infosys, LTI Mindtree and Tech Mahindra, while industry leader TCS managed to remain positive by a small margin.


Source: NSE, CMP as on May 9, 2023

Despite weakness in the IT sector, analysts remain broadly optimistic about Indian equity markets. Global brokerage Goldman Sachs expects the Nifty50 to touch 20,000 in the next 12 months, thanks to double-digit earnings growth, while Morgan Stanley has upgraded Indian equity markets to ‘equal-weight’ thanks to the resilient economy and reasonable valuations.

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