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FIIs may increase stake in equity markets; hold ₹3.62L crore assets in healthcare

Inflows from foreign institutional investors (FIIs) are likely to stay strong in the financial year 2025 on the back of robust economic growth and momentum in earnings growth. Earlier, global investors poured Rs 2.08 lakh crore in the domestic equity market and Rs 1.21 lakh crore in the debt market in FY24. As a result, the benchmark equity index‑‑BSE Sensex‑‑gained nearly 25% in the last 12 months till March 2024, while the broader indices–BSE Midcap and BSE Smallcap–advanced 63% and 60%, respectively.

Meanwhile, foreign portfolio investment (FPI) holdings in the domestic equity market dropped to a decadal low of 16.6% in 2023, largely due to a selloff triggered by portfolio underperformance and a spike in US bond yields. Alok Agarwal, Head Quant & Portfolio Manager, Alchemy Capital Management said, “Despite the drop, FPI inflows in FY24 remained robust, indicating continued foreign investor confidence in the Indian market. Additionally, the emergence of retail investors in the domestic stock market has played a crucial role in counterbalancing the impact of FPI outflows, with domestic mutual funds and direct retail investors significantly increasing their free float ownership of NSE-listed companies, thereby reducing the influence of FPI flows.”

He added that India is one of the rare large economies with double-digit nominal GDP growth, double-digit corporate earnings growth and double-digit RoE. “We expect FPI flows to remain strong and would expect them to resume increasing their stake in Indian markets,” Agarwal said.

Sectorwise, FIIs had Rs 18.29 lakh crore of assets in the financial services sector in India as of March 15, 2024. It was followed by information technologies (Rs 6.45 lakh crore), oil, gas & consumable fuels (Rs 5.80 lakh crore) and automobile, auto components (Rs 4.39 lakh crore), FMCG (Rs 4.11 lakh crore), healthcare (Rs 3.62 lakh crore) and capital goods (Rs 2.85 lakh crore), as data available with NSDL.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services

“The resilience of the Indian stock market and the improving macros of the Indian economy forced the FPIs to stay buyers in India. This trend is likely to continue.”

Sharing its view on robust inflows by institutional investors, Nuvama Institutional Equities said, “With a consistent flow from domestic institutional investors (DII) and now if steady FII participation resumes, there is potential for India to surpass a 20% weighting in the MSCI EM Index by the second half of 2024 itself.”

Data available with Ace Equity showed that FIIs held a 71.93% stake in CarTrade Tech and a 64.42% stake in Samhi Hotels as of December 2023. They also held 63.72% stake in Paytm and 62.71% in Delhivery. Overseas investors also held more than 50% stake in other companies such as 360 One Wam, Max Healthcare Institute, Redington, Zomato, Axis Bank, Five-Star Business Finance, Shriram Finance, HDFC Bank and Max Financial Services. Business Today

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