FIIs, DIIs remain overweight on financials: BofA Securities

Our Bureau Chennai | Updated on April 20, 2021

India sees inflows when most EMs witness outflow

Although FII inflows into Indian equities decreased in March, it remained positive at $1.4 billion as against the fund flows seen in February at $3.5 billion, said a BofA Securities report.

As of March-end, within the NSE universe, FIIs continue to maintain ‘Overweight’ (OW) positions in energy (+5.7 per cent), financials (+4.1 per cent), information technology (+1.4 per cent) but remain ‘Underweight’ on materials (-9.6 per cent), industrials (-1 per cent) and healthcare (-0.8 per cent), BofA Securities said.

Domestic institutions too maintain OW positions in financials (+1.8 per cent), IT (+6.8 per cent), while they remain UW on materials (-0.4 per cent) and healthcare (-0.1 per cent), the report indicated. However, DIIs continue their OW stance in Industrials (+3.6 per cent) even as FIIs remained UW.

According to the investment advisory firm, active funds continue to drive the FII flows ($1.2 billion) vs passive funds ($263 million). FII inflows stood at $7.2 billion in this calendar year until April 16.

India stands tall

India continued to see FII inflows (in March), while most EMs witnessed outflows, it said. Accoring to the report, Taiwan saw the biggest outflow of $5.5 billion followed by South Korea (-$1.3 billion) and Brazil (-$828 million). Year-to-date (YTD) flows for India stand at ($7.4 billion) even as Taiwan (-$10.6 billion), South Korea (-$14.1 billon) and Brazil ($3.1 billion) saw heavy outflows.

DIIs turn positive

Domestic institutional investors (DIIs) have turned positive at $2.2 billion after seeing redemptions for eight months in a row, it said.

"In terms of our strategy view, we expect markets to consolidate near term and our preference is for defensive sectors," BofA Securities said.

March saw inflows across fund types such as thematic fund ($275 million), mid-cap fund ($205 million) and large & mid-cap fund ($129 million). DII flows YTD in 2021 stood at $1.3 billion spread across fund types such as Multi-cap fund ($921 million) and Large & mid-cap fund ($125 million), it said.

Systematic investment plan inflows has been highest in March 2021 since January 2018 at $1.3 billion, the report said adding that retail trading activity has also spiked to 66 per cent of total market volumes (vs long term average of 49 per cent).

Ownership pattern

As at end of March 2021, within NSE-500, majority share is held by private founders (46 per cent) followed by FIIs (20 per cent), retail investors (9 per cent), DMFs (7 per cent), Government (5.5 per cent) and banks, FIs and Insurance (5 per cent). Since December 2020, the ownership patterns have changed for private founders (+120 bps), retail (+20 bps) and FIIs (-150 bps).

Published on April 20, 2021

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