Financials attract over 50% of FPI flows in Feb SUNDAR SETHURAMAN

Sector now accounts for 34.8% of foreign investor assets, shows Edelweiss data

Banking and financial stocks were the preferred picks of foreign investors in February, accounting for $1.96 billion of the $3.56 billion foreign portfolio investors (FPIS) pumped into domestic equities in the month, according to data analysed by Edelweiss.

“The sector now accounts for 34.8 per cent of FPI assets, up from 33.8 per cent in January. The flows drove the banking sector index to an all-time high,” said Abhilash Pagaria, analyst, Edelweiss Securities.

The Bank Nifty index rose as much as 22 per cent in February, though it corrected later, but it still ended the month with a gain of 13.5 per cent. In comparison, the benchmark Nifty gained about 6 per cent.

The oil and gas sector attracted flows of $676 million in February, the most in about two years. The sharp flows propelled several stocks in the banking and energy space.

State Bank of India rose the most, by 38 per cent, IDFC Bank gained 34 per cent, while Indusind Bank and Bank of Baroda rose about 25 per cent each.

“We wouldn’t be surprised if a major chunk of inflows would have chased PSU (public sector undertaking) banks,” said Sriram Velayudhan, VP, Alternative Research, IIFL Securities. “With FPI ownership in PSU banks at multi-year lows, it will be interesting to monitor the FPI ownership figure in PSU banks in the months ahead.”

The Nifty PSU Bank index rose 32 per cent in February, even as the Nifty Private Bank index rose just 11 per cent.

Meanwhile, Gujarat State Petronet and ONGC rose 26 per cent each, followed by BPCL and Reliance Industries, which rose 18 per cent and 13 per cent, respectively.

However, the picture was different for some other indices. For instance, the IT index fell 1.5 per cent as the sector saw outflows of $321 million, and the fast-moving consumer goods (FMCG) sector saw about $100 million of outflows and the sectoral gauge declined 2 per cent in February.