What Foreign Investors Bought And Sold In December

Foreign investors remained net buyers of Indian equities in December. This even as they sold bank stocks for the sixth consecutive month.

The foreign portfolio investors sold $497 million in the banking shares during December, according to the National Securities Depository Ltd. data. This was the highest outflow among other sectors. This was followed by software services sector and pharmaceutical sectors with outflows of $244 million and $119 million, respectively.

Higher valuations in the banking sector stocks have led the foreign investors to exit, according to Deven Choksey, managing director of KRChoksey Investment Managers. “The valuations have moderated at present. Besides, the government and the Reserve Bank of India have taken measures to ensure that there is enough liquidity. This could lead to some inflows going forward, unless there is an external factor kicking in that could spook them again,” Choksey told BloombergQuint over the phone.

The overseas investors sold $2.6 billion in the banking sector in 2018, the highest outflow in at least over six years.

Foreign investors continued to remain buyers for the second consecutive month after they infused about $442 million in the Indian equity market in December. The overseas investors, however, pulled out nearly $4.3 billion last year from the equity market. This comes after they poured in nearly $8 billion in the preceding year.

What Foreign Investors Bought In December

While the non-banking financial companies remained at the top of foreign investors’ shopping list for the second straight month, they entered the insurance sector for the first time in four months.

The NBFCs received $552 million last month, its highest since March 2017. This was followed by electric and other utilities with an inflow of $161 million.

The NBFCs received a big boost from the Reserve Bank of India’s decision to ease liquidity. The central bank allowed banks to offer partial credit enhancement or backing to bonds issued by some of these firms to improve their creditworthiness. It also reduced by half the minimum time for which non-bank lenders have to hold loans on their books before they are allowed to sell them.

Foreign investors funnelled $1,856 million into NBFCs in 2018, the highest in six years.