NEW DELHI: Before going away for Christmas and New Year vacations, foreign institutional investors or FIIs spent over $1 billion on Indian stocks in the penultimate fortnight of 2022. NSDL data shows that FIIs, which were net sellers in realty stocks in the last fortnight of November, took a u-turn and splurged Rs 3,150 crore on the sector.
Consumer services (Rs 2,676 crore), FMCG (Rs 2,649 crore), capital goods (Rs 1,984 crore) and metals and mining (Rs 1,391 crore) were among the other top sectoral favourites.
On the other hand, oil and gas (Rs 2,230 crore), IT (Rs 1,314 crore) and power (Rs 1,087 crore) witnessed selling pressure from FIIs.
In the calendar year 2022, FIIs have been net buyers of Indian equities in 4 months of July, August, November and December. The total FII outflow has been worth around Rs 1.2 lakh crore amid quantitative tightening and rate hikes by the US Fed.
Accelerating the outflow was the sharp depreciation in the value of Indian rupee against the US dollar. The domestic currency has so far lost over 11% of its value against the greenback.
What should investors do?
Most analysts are shifting bets to domestic-oriented sectors for 2023 amid worries related to global macros and the FII buying also reflects that.
Among major sectoral indices, Nifty FMCG is the only one that has survived the sell-off in the last one month. Given that India’s consumption story remains bright, most analysts are bullish on the sector and do expect 2023 to bode well against the backdrop of a recovery in rural consumption, cooling off inflation, and strong domestic growth.
Kotak Institutional Equities prefers consumer staples stocks over high-end discretionary stocks based on the view of a faster recovery in incomes of low-income households. “We would expect consumer staples stocks to hold up better in the case of any meaningful market correction,” the brokerage said in its 2023 outlook report.
Dalal Street’s old favourite IT is hardly finding any takers. The sector is already the worst performing in 2022 and investors fear more downside ahead.
“We expect two themes to play out in CY23 viz. credit growth and capex and thus sectors like BFSI, capital goods, infrastructure, cement, housing, defence, railways could be in focus,” domestic brokerage Motilal Oswal said.
(With data inputs from Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
