FII Ownership of 500 NSE stocks are at 3-year low : BofA Securities report

In terms of sectors, FII inflows were largely skewed in favor of Energy (+$871 million), Utilities (+$39 million) and Healthcare (+$35 million). “Financials (-$3.5 billion), Industrials (-$724 million), Discretionary (-$1.3 billion) saw highest outflows since March 2017.

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Foreign institutional investor’s (FII’s) ownership of NSE 500 stocks hit a three-year low of 19.5 %, suggested a note by BofA Securities. In terms of flows into Indian equities, March 2022, BofA Securities’ note said, was the sixth consecutive month of FII outflows (-$5.4 billion, most severe since March 2020) on the back of continued geopolitical risks, sustained elevated inflation led by supply-side issues, rising commodity costs.

On a month-till date (MTD) basis, April 2022, however, saw the pace of outflow slow (-$1.2 billion), indicating potential stemming/reversal of FII outflows.

On a year-to-date (YTD) basis, calendar year 2022 outflows stood at $15.7 billion. Domestic institutional investors (DIIs), on the other hand, remained upbeat on the road ahead for the markets with monthly flows touching new highs at $6 billion (+19 % MoM), crossing $5 billion mark for the second consecutive month (YTD +$14.6 billion up to March 2022).

Given the multiple headwinds, BofA Securities expects markets to be sideways the near-term given inflation impacting volume growth and margins across several sectors.

“Our year-end Nifty target of 17,000 offers no upside; we prefer financials, industrials, select autos among cyclicals and utilities and healthcare among defensives,” wrote Amish Shah, head of India research at BofA Securities in a recent note.

In terms of sectors, FII inflows were largely skewed in favor of Energy (+$871 million), Utilities (+$39 million) and Healthcare (+$35 million). “Financials (-$3.5 billion), Industrials (-$724 million), Discretionary (-$1.3 billion) saw highest outflows since March 2017. Outflows in IT (-$80 million) slowed significantly, while Materials saw heavy outflows (-$520 million),” the BofA Securities note said.