Experts see return of FIIs soon

Foreign portfolio investors (FPI) have pared stakes in 35 out of the Nifty 50 companies during the second quarter of this financial year as turmoil in the Chinese markets and the heightened prospects of an early lift-off in US interest rate led to heavy sell-off in emerging market equities.

During the July-September period, FPIs pulled out over Rs 18,000 crore from domestic equity markets, the second highest outflow within the emerging markets and the highest outflow since December 2008. according to ICICI Securities.

However, it added that the declining volatility in emerging markets, deceleration in the pace of earnings downgrade and expectation of pick-up in corporate India’s growth in the second half of this fiscal year could accelerate foreign fund flow into the Indian equities. In October 2015, they turned net buyers of equities worth Rs 6,649.58 crore.

On a quarter on quarter (QoQ) basis, the aggregate FPI holding in Nifty stocks remained flat at 28.6 per cent although they have trimmed their ownership in 35 stocks. They have reduced their holding by more than two per cent in nine out of these 35 stocks.

According to an analysis by the ICICI Securities, as at the end of September 2016, foreign investors are overweight on private sector banks, financial and pharma whereas domestic institutional inves-tors are underweight on these stocks.

FPIs on the other hand, are underweight on consumer staples, industrials, energy and PSU Banks while domestic institutions were seen having overweight positions on these stocks.