Domestic Investors Come to Rescue, Allay Foreign Outflows in Q4: Detailed Picture

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Domestic Investors Come to Rescue, Allay Foreign Outflows in Q4: Detailed Picture
Credit: © Reuters.

By Malvika Gurung

Investing.com -- Foreign investors have been net sellers in the domestic markets since October 2021 and continued offloading funds from Indian shares for the seventh consecutive month in April to the tune of Rs 17,144 crore.

A major reason for the selling spree by FPIs is the imminent aggressive Fed rate hike, which has spooked investors, in conjunction with rising inflationary pressures compounded by effects of the ongoing Russia-Ukraine war, including flying crude oil and commodity prices.

Analysts predict that foreign outflows will likely continue in the near term amid prospects of aggressive monetary policy tightening by the Fed to tame multi-year high inflation.

Even though FPI outflows intensified in the March-ending quarter, it was offset by solid buying witnessed from domestic investors or DIIs.

While FIIs slashed their stakes in 36 Nifty50-listed stocks, the DIIs raised their holdings in 72% of the stocks in the quarter, stated a Motilal Oswal (NS: MOFS ) report.

The selling pattern of FIIs in Q4 FY22, indicates foreign investors to be bearish domestic heavyweights from IT, financials and auto sectors, while pharma, FMCG and industrial scrips also witnessed foreign sell-offs.

FIIs cut their holdings over 4% in HDFC Life Insurance (NS: HDFL ), 3% in HDFC (NS: HDFC ) and 2.3% in Dr. Reddy’s Laboratories (NS: REDY ) in Q4 on a QoQ basis while trimming stakes from 1-2% in other domestic stocks like M&M (NS: MAHM ), Maruti Suzuki (NS: MRTI ), HDFC Bank (NS: HDBK ), ICICI Bank (NS: ICBK ), and Hindustan Unilever (NS: HLL ), among other industry majors.

In FY22, FPIs offloaded over Rs 1.1 lakh crore from Indian shares, and Rs 41,123 crore in March 2022.

However, saving the domestic equity market, DIIs have appeared bullish on IT heavyweights like Infosys (NS: INFY ), Wipro (NS: WIPR ), HCL Tech (NS: HCLT ) and Tech Mahindra (NS: TEML ), raising their holdings in these companies up to 1%, and upping stakes in Tata Steel (NS: TISC ), Maruti Suzuki, HDFC Bank, ICICI Bank, and other major companies between 1-2%.

DIIs appear bullish in the IT, FMCG, pharma, industrials and healthcare sectors.

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