Foreign investors return to IT stocks after months of selling
What's the story
In a major development, foreign portfolio investors (FPIs) have shown interest in Indian information technology (IT) stocks for the first time this year. The inflow of ₹3,298 crore during the second half of July marks a significant turnaround. Consumer durables and healthcare sectors also witnessed an influx of foreign investments during this period. The sectors attracted ₹4,958 crore and ₹3,654 crore, respectively, during the second half of July.
Market trends
Net buyers in the second half of July
According to National Securities Depository Limited (NSDL) data, FPIs turned net buyers of equities worth ₹4,640 crore in the second half of July.
This was on top of an investment of ₹15,560 crore in the first fortnight.
The trend indicates a shift as July was only the second month to see net inflows since February.
Market performance
Positive momentum in indices during July
The Nifty 50 and Sensex gained nearly 2.1% each in July, while the Nifty Midcap 150 and Smallcap 250 rose by 1.6% and 1.1%, respectively.
Pankaj Pandey, head of fundamental research at ICICI Direct, observed that money is slowly moving into broad markets from index heavyweights as midcap and smallcap indices scale fresh highs.
Market sell-off
Selling pressure in certain sectors
Despite the buying spree in various sectors, FPIs sold shares worth between ₹1,056 crore and ₹3,618 crore in metals & mining, power construction, financial services, telecom, and capital goods.
The selling in financial services came after two fortnights of buying in June and early July.
Vikas Gupta, CEO at OmniScience Capital, said this shift may reflect tactical trades amid uncertainty about medium-term revenues and profits of IT companies.