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Stocks of healthcare, consumer staples and capital goods companies are the new favourites of foreign investors as they look for defensive bets to weather the gloomy global economic outlook.
As per NSDL data, foreign portfolio investors (FPIs) have pumped in a net investment of ₹16,573 crore in the healthcare sector in the first three quarters of the current fiscal. FMCG and capital goods sector saw net inflows of ₹16,566 crore and ₹12,334 crore respectively, during this period.
Urvi Shah, Research Analyst at SAMCO Securities says healthcare sector is gaining traction among FPIs amid pick up in elective surgeries, higher occupancy and revenue per bed in hospitals post the pandemic-led downturn in the sector.
“FMCG being a defensive play is attracting FPIs,” Shah said, adding, the input costs of the sector have declined considerably, which along with price hikes, bodes well for the financials of the sectoral companies.
Defensive sector refers to companies whose performance is relatively unaffected by the market or economic downturns as opposed to cyclical sector, which includes companies producing discretionary items or services that are in demand when the economy is performing well. Healthcare, consumer staples, and household products fall under the defensive sector.
New Capex cycle
Sanjay Moorjani, Research Analyst, SAMCO Securities said the upbeat trend in the capital goods sector is on the hopes of a new capex cycle in India driven by increased government spends with policies like Gati-Shakti, National Infrastructure Pipeline, Production-linked Incentive scheme acting as a catalyst.
“Capital goods is emerging, perhaps, as the best story in CY2023,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. He added that capacity utilisation in manufacturing has crossed the 75 per cent threshold, at which, normally capex gets triggered. The impressive credit growth in the economy and capex plans by companies augur well for the capital goods segment.
Recessionary fear
The IT services sector saw the highest net outflow of FPI money in the first nine months of the current fiscal at ₹43,160 crore. Veer Trivedi, Research Analyst, Samco Securities said, Indian IT companies get a significant share of their revenues from the US and Europe. With these markets facing a downward trend or on the verge of recession, the demand for the IT services remain subdued.
Oil & Gas saw the second highest outflow at ₹18,281 crore followed by financial services (₹14,266 crore).
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