FPI buying in Indian shares hits 6-month high in first half of May: NSDL

Foreign portfolio investors (FPIs) extended their buying streak in Indian equities in the new financial year, having bought shares worth 249.39 billion rupees on a net basis in the first half of May, National Securities Depository Ltd (NSDL) data showed on Monday. This was the highest buy by FPIs in six months since November 2022. In fact, FPIs bought Indian equities in each of the nine sessions in the first half of May.

The foreign institutional investors (FIIs) had been net purchasers in March and April, largely due to U.S. investment firm GQG Partners' $1.87 billion investment in four Adani Group companies and stable quarterly earnings.

The benchmark Nifty 50 jumped 1.85% in the first half of May, as FPI inflows powered the rise in domestic equities.

The renewed interest from FPIs is also driven by India's stable macro economic indicators such as robust goods and services tax collections, slide in inflation, said two analysts.

WHAT FPIs BOUGHT IN MAY

After selling financial services shares worth 299.93 billion rupees in FY2023, FPIs have shown renewed interest in the sector, buying 83.82 billion rupees in May. FPIs had bought 76.90 billion rupees in the sector in April.

"Earnings momentum continued for the banking sector in March quarter, and aided sentiment in the markets," said analysts at Motilal Oswal Financial Services in their interim review of the earnings season.

Automobile, oil and gas, healthcare, and fast moving consumer goods also witnessed buying in May, while information technology saw selling. Analysts said the turmoil in banking system in the U.S. and softness in technology spends by clients in the U.S. and Europe affected earnings of IT companies and triggering FPI selling in the sector.