In the quarter ended March, foreign portfolio investors sold big time into Indian equities, but amid the rout spurred more in February-March due to the Covid 19 pandemic, saw buying interest mainly in pharma and NBFC space.
This is as per the latest FPI holding in Indian stocks and has upped their stake by 500 bps in some of the financial and pharma counters.
Among these while pharma stocks over outshined most sectors due to ease in regulations as well as increase in demand for pharma products due to Covid 19, NBFC space has bore the brunt with stocks tumbling up to 50% on rising concerns on mounting bad loans as well as liquidity concerns due to prolonged lockdown situation in the domestic economy similar to other nations.
Nonetheless, analyst warned investors to be careful while picking stocks from both the space.
NBFCs where FPIs increased their holding in March ended quarter
|NBFC||FPI holding in March qtr in %||FPI holding in December qtr in %||Closing price as on April 30, 2020|
|Aavas Financiers||23.64||18.79||Rs. 1197.05|
|Ujjivan Financial Services|
|Max Financial Services|
During the quarter, they sold into Indian equities worth Rs. 48,030 crore.
Pharma players where FPIs increase their stake
|Pharma company||FPI holding in March qtr in %||FPI holding in December qtr in %||Closing price as on April 30, 2020|
The other pharma names where FPIs have raised their stake sequentially by between 90-150 bps include Eris Lifesciences, Dishman Caebogen, Ajanta Pharma and Alkem Laboratories.
Outlook for Nifty and Pharma stocks going ahead:
In the current unprecedented, for the NBFC counters, it is strictly adviced to bet only on those names that have well-managed asset-liability management together with strong promoter betting i.e. precisely larger counters. This is because small players will find difficult to mop-up funds.
For the pharma stocks, the time is highly lucrative as the government may ease further regulation and indeed provide support for setting up API units within the shore.