FIIs increased stake in these BSE 500 stocks in June quarter; should you buy?

Heavy selling by foreign institutional investors (FIIs) kept the domestic equity market jittery during the June quarter when the benchmark BSE Sensex cracked 9.4 per cent or 5,500 points. Data available with corporate database Ace Equity showed that overseas investors pulled out Rs 1.07 lakh crore in Q1FY23.

However, they continued to increase their stake in selected stocks from across the sectors. Initial shareholding data showed that they further picked up a stake in at least 163 BSE 500 firms during the quarter. Some of the stocks in the list included Aditya Birla Fashion, Aditya Birla Sun Life AMC, Advanced Enzyme Technologies, BHEL, Biocon, Blue Dart, Hindustan Zinc, IIFL Wealth Management, VIP Industries, Suzlon, Uflex, TTML, Tata Chemicals, Tata Coffee and Tata Elxsi, among others.

Among the Nifty50 companies, FIIs raised their stake in Cipla to 27.65 per cent in the June quarter from 26.65 per cent in the preceding quarter ended March 31. They also raised their stake in Dr Reddy’s Laboratories (to 25.87 per cent from 25.16 per cent), Eicher Motors (to 29.50 per cent from 29.22 per cent), ITC (to 12.68 per cent from 11.99 per cent), ONGC (to 9.97 per cent from 9.91 per cent) and Power Grid (to 30.25 per cent from 29.35 per cent).

Sectorwise, overseas investors increased their holdings in AU Small Finance Bank, Bandhan Bank, Bank of India, Bank of Maharashtra, City Union Bank, CSB Bank, Equitas Small Finance Bank, Indian Bank and YES Bank in the banking space.

In the auto and auto ancillary space, FIIs upped their stake in Apollo Tyres, Ashok Leyland, Balkrishna Industries, Amara Raja Batteries and MRF.

On asking why overseas investors are on a selling spree? VK Vijayakumar, chief investment strategist, Geojit Financial Services said the major factors driving FPI selling during the last 2-3 months have been the steady appreciation of the dollar and rising interest rates in the US.

“If the rupee consolidates at the current level, which in turn depends mainly on the price of crude, FPI selling will come down. But India’s high trade deficit of $25 billion is an area of concern. If the trade deficit continues to remain high, we may see further depreciation of the rupee in the next two months,” Vijayakumar said.