Foreign portfolio investors (FIIs) became net buyers of Indian stocks in December 2024 after selling shares worth about $14 billion in October and November. Foreign investors bought shares worth $1.83 billion this month.
Others bought more IT stocks in December, while selling $1.3 billion in oil and gas stocks, data from NSDL showed. FIIs also increased their positions in real estate, healthcare and capital goods.
FPIs bought IT stocks worth $1.1 billion in the month, followed by real estate ($562 million) and healthcare ($442 million). The data also showed that foreign investors invested $368 million in capital goods and financial services stocks. As far as sales are concerned, they sold shares worth $513 million and $327 million in the automobile and consumer staples sectors, respectively.
Interestingly, the buying in IT stocks has happened just ahead of the December quarter Q3 announcement. FIIs have the second largest investment in the IT sector, followed by financial services. These two sectors constitute 40% of their net investment in India.
Yet FIIs have sold in Indian stocks for most of 2024, citing slow profit growth and high valuations as the reasons. Nifty50 is trading at 19.4x its one-year forward earnings, compared to 8.6x for Korea and 16x for Taiwan TAIEX. According to Bloomberg data, the valuation of the Chinese CSI 300 index is 12.3x.
Ridham Desai, MD, Morgan Stanley India, believes December quarter earnings growth will be in mid-signal digits as topline growth is weak. He says that we are confident that the earnings situation remains improving and will remain ahead of consensus estimates. Morgan Stanley has placed bets on large private banks, select consumer, industrial stocks and IT services stocks in the earnings season.
Shares of Tata Consultancy Services (TCS) rose nearly 6% in Friday trade as the IT giant expressed confidence about growth in discretionary spending by clients, even as December quarter earnings fell short of analysts’ estimates. The Nifty IT index rose 3.4% on Friday, its biggest intraday gain in two months.
By the end of December 2024, the Assets Under Construction (AUC) of FIIs stood at $831 billion, which is 16% of the country’s market share.
Disclaimer: This information is for informational purposes only and should not be construed as investment advice. It is recommended to consult a financial advisor before making investment decisions.