Domestic benchmark indices ended the month of August in the red. The BSE Sensex fell 1,696.26 points, or 2.55 percent, and ended the month at 64,831.40. Similarly, the NSE Nifty 50 fell 500 points, or 2.5 percent, to 19,253.80.
Despite the fall in the index, Global investors are looking at India as an attractive investment for a long-term growth perspective as an alternative to China, So Foreign institutional investors are pouring money into India, picking stocks carefully in the market.
While FPI flows were moderate in the first half of August, totaling Rs 4,916 crore, they picked up momentum in the second half, totaling Rs 13,422 crore, largely helped by some big purchase deals by Fund Houses.
This year, foreigners have invested about $16.5 billion in the Indian stock market, and in August, Foreign Portfolio Investors invested about $2.2 billion.
The power industry, which had the largest influx of FPI funds in August 2023 at Rs 13,147 crore, was followed by the capital goods sector, which saw inflows of Rs 8,330 crore. After a very long period, each of these industries received FPI flows totaling over $1 billion in a single month. Third, the IT sector received Rs 4,088 crore in inflows, followed by Consumer Services, which received Rs 2,035 crore, and Healthcare, which received Rs 1,439 crore.
Here are the three sectors that have seen huge inflow of FII funds in August Power Sector
The Indian government plans to use renewable energy sources in order to achieve net zero emissions by 2070. Furthermore, the Ministry of Power expects that by 2030, the country will be able to meet 62 percent of its energy demands using non-fossil fuel sources reaching 500 GW.
FII capital inflows into the Power sector were Rs 13,147 crores in August Month. The S&P BSE Power Index has returned 30 percent over the previous six months.
Here are the major stocks in this sector: NHPC, Torrent Power, Inox Wind Energy Ltd, Power Grid Corporation of India Ltd, and Adani Green Energy Ltd
Capital Goods
This sector was seen as a second favorite sector for FIIs in August, and this sector has seen consistent inflows over the last seven months. On a year-to-date basis, the S&P BSE Capital Goods Index has risen 40 percent.
The Capital Goods sector saw higher net inflows of Foreign funds of Rs 8,330 crore in August 2023 compared to July. A significant portion of this flow has gone to aerospace and defense stocks.
Capital Goods has a market size of $43.2 billion in India. The capital goods industry is divided into ten sub-sectors, with electrical equipment being the largest, followed by plant equipment and earthmoving/mining machinery.
Information Technology Sector
The IT industry contributed 7.4 percent of India’s GDP in FY22 and is expected to contribute 10 percent by 2025. India’s IT spending is anticipated to rise to US$ 110.3 billion in 2023, up from an estimated US$ 81.89 billion in 2021.
FII capital inflows into the Information Technology sector were Rs 4,088 crores in August Month. On a year-to-date basis, the S&P BSE IT Index has risen 14 percent.
Here are the major IT stocks in this sector such as TCS, Tech Mahindra, LTIMindtree, and Infosys.
Written by Omkar Chitnis
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