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While they bought more IT shares in December, they cut exposure in oil & gas stocks by offloading $1.3 billion, according to data collated from NSDL. Other sectors in which FIIs increased their exposure include realty, healthcare and capital goods.
The month witnessed FPIs buying $1.1 billion worth of IT stocks, followed by realty ($562 million) and healthcare (442 million). The data further shows that the foreign investors have acquired capital goods and financial services stocks for $368 million each. As far as selling is concerned, they offloaded shares in the automobile and consumer staples sectors by $513 million and $327 million, respectively.
Also Read: Here is how other Nifty IT stocks like Infosys, HCLTech are reacting to TCS Q3 results
Interestingly, buying in IT stocks comes just ahead of the December quarter earnings announcement. FIIs have the second-highest exposure to the IT sector, followed by financial services. The two sectors together account for 40% of their net investment in India.
Nevertheless, FIIs have been net sellers of Indian equities for most of 2024, citing slowing profit growth and elevated valuations. The Nifty50 is trading at 19.4 times its one-year forward earnings against 8.6x for Korea and 16x for Taiwan TAIEX. Chinese CSI 300 Index commands a valuation of 12.3x, according to Bloomberg data.
Ridham Desai, MD of Morgan Stanley India, believes that the earnings growth for the December quarter to be in mid-single digits due to weak top-line growth. “We believe the earnings upcycle is intact and remains ahead of consensus expectations,” said Desai. Morgan Stanley bets on large private banks selected consumer and industrial stocks, and IT services shares going into the earnings season.
Also Read: The Nifty PSE index is down 7% this week but only one stock has held on to gains
Shares of Tata Consultancy Services (TCS) rallied nearly 6% in Friday’s trade after the IT behemoth sounded confident about the increase in discretionary spending by clients even as the earnings for the December quarter trailed analysts’ estimates. The Nifty IT index rallied 3.4% on Friday to mark its biggest single-day gain in two months.
At the end of December 2024, the asset Assets under Custody (AUC) of FIIs stood at $831 billion, which is 16% of the country’s equity market.
