Foreign institutional investors (FIIs) are projected to have spent over Rs 1 lakh crore on just 10 equities, including Zomato and ITC NSE -0.33% in the September quarter, despite the fact that their shareholding in Indian stocks has dropped to a 10-year low of 19%.
Out of the 764 equities that FIIs purchased last quarter, Tata Steel NSE -1.84% topped the list with a net purchase estimated to have cost Rs 24,898 crore. In the most recent quarter, FIIs purchased 244.42 crore shares of the metal company. In the quarter, the stock increased by more than 14%.
Bharat Electronics, a Navratna defence PSU stock, saw the second-largest FII purchase, with 87.89 lakh shares purchased for more than Rs 22,000 crore.
FIIs increased their holdings in Zomato, a modern stock that is currently trading below its IPO issue price of Rs. 76 per share. FIIs purchased more than 139 crore shares in Q2. Their investment was projected to be worth 8057 crore when the difference between their shareholding in June and September was multiplied by the average closing price for the quarter.
Additionally, FIIs increased their holdings in the big cigarette to hotel company ITC, one of the top-performing Nifty stocks in 2022. According to the statistics, FIIs purchased 10.39 crore shares of the FMCG firm for more than Rs 3,200 crore.
Other notable selections included Bharti Airtel NSE 0.71%, ICICI Bank NSE 0.21%, HUL NSE 0.83%, and GAIL NSE 0.67%. Bajaj Finserv NSE -1.34%, Max Healthcare NSE -1.93%, and (India)
What should investors do?
Shares of ITC, Airtel NSE 0.71%, HUL, and ICICI Bank have been popular picks for local investors and brokerages in the top 10 FII buys. ITC has had 8 target price improvements from brokerages in the past month alone, while Airtel, HUL, and ICICI Bank each had 7 upgrades.
Banking is still a popular industry due to its stronger and cleaner balance sheets, improving credit growth, and overall improvement. All 38 brokerages that have coverage on the stock agree that ICICI Bank, which is the second-largest investment for DIIs (Rs 2.23 lakh crore) and the third-largest investment for FIIs (Rs 3.26 lakh crore), is the best stock to buy.
Analysts advise investors to choose equities from domestic consumption-related industries since the global economy is beginning to stall.
While the outlook for domestic consumption sectors has improved due to the moderation in commodity costs, such as staples, durables, and the auto industry, we believe that the margin upside is already factored into the consensus estimates and we would like to wait for better entry points with sectors trading at a significant premium to their historical valuations.
Autos, in especially the premium segment, recorded strong figures during the Q2 earnings season. The order book suggests that excellent times are ahead for capital goods, which is another area of strength. Results in the IT industry have increased in accordance with expectations. Commodities, which include cement, metals, and oil and gas, are the poorest sector.