What Foreign Investors Bought And Sold In May

Foreign investors remained net buyers for the fourth consecutive month in May after Narendra Modi-led Bharatiya Janata Party returned to power with a bigger mandate.

Overseas investors funnelled $1.13 billion into Indian equities last month, National Securities Depository Ltd. data showed.

This comes as Indian equity benchmarks extended gains for the third consecutive month. The S&P BSE Sensex returned 1.8 percent while the NSE Nifty 50 gained 1.5 percent in May.

Foreign investors had initially pulled out $401 million in the first 15 days of May. They, however, infused $1.5 billion in the second half of the month. Of the total investments, about 91 percent or $1.13 billion were invested in miscellaneous stocks, which did not fall in any sector-wise category, NSDL data showed.

Non-banking financial companies received the second highest foreign inflows after overseas investors infused funds for the seventh straight month. The sector was followed by insurance and capital goods.

To be sure, foreign investments into individual stocks in May were not available. However, these were the buzzing stocks last month which could have attracted overseas investors’ attention:

• Bharti Airtel Ltd.: Billionaire Sunil Mittal-backed telecom operator, which was looking to pare more than Rs 1,12,000-crore debt raised close to Rs 25,000 crore via rights issue last month. The issue was oversubscribed.
• Adani Green Energy Ltd.: Two promoters—Adani Tradeline LLP and Universal Trade and Investments Ltd.—sold 5.59 percent stake in the company through an offer-for-sale. The offer was subscribed 1.26 times, NSE data showed.
• Reliance Nippon Life Asset Management Ltd.: Promoter Reliance Capital Ltd. sold cumulatively 8.66 percent stake in the company via an offer-for-sale. The offer was subscribed 1.73 times, NSE data showed.

The Outflow Picture

Software and services sector witnessed the highest foreign fund outflow in May.

Overseas investors remained net sellers in the sector for the second consecutive month and sold $461 million last month. The sector witnessed the highest monthly selloff in seven months, according to data compiled through NSDL. Of this, $269 million was sold between May 16 and May 31.

The NSE Nifty IT Index, which comprises of 10 technology shares, declined 3.3 percent, the most in seven months.

Foreign fund outflows in the technology sector was followed by the pharmaceuticals and biotechnology sector. Foreign investors withdrew $339 million from the pharma sector last month, the highest in two years, NSDL data showed.

The NSE Nifty Pharma Index fell 10.1 percent in May, the most since May 2017, led by the declines in Cadila Healthcare Ltd., Aurobindo Pharma Ltd. and Glenmark Pharmaceuticals Ltd.

Cadila Healthcare was in the news last month after its Moraiya facility—the largest contributor to the company’s U.S. business—received Form 483 from the U.S. Food and Drug Administration with 14 observations after the inspections held between April 22 and May 3.

Form 483 is used by the FDA to document and communicate concerns discovered during plant inspections.

Aurobindo Pharma slumped nearly 18 percent in May after the U.S. drug regulator classified three of its plants that export to the U.S. as “official action indicated’, necessitating regulatory and administrative action, according to its stock exchange notification on May 17.