FIIs likely to turn out consistent buyers in Indian markets soon
A perplexing feature of the recent FII activity is their highly erratic nature.
Nearly half of the BSE-200 companies yielded negative returns last month, according to a recent report by Motilal Oswal Institutional Equities.
On a year-to-date basis, 59 per cent of BSE-200 constituents declined, as Future Retail and financial stocks like Canara Bank, Bank of Baroda, and Punjab National Bank were the major laggards, said the report titled ‘India Strategy – NOV’20: The Eagle Eye’.
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“In all, 47 per cent of BSE-200 companies yielded negative returns in Oct’20,” it said.
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The average daily cash volumes in October were down 6 per cent on a month-on-month (MoM) basis. “Monthly institutional cash trading volumes are down 9 per cent MoM to Rs 4.1 trillion from Rs 4.5 trillion in Sep’20,” it said.
The report further said that domestic institutional investors (DII) pulled out their money from the Indian equities with DII outflows in October at $2.4 billion, the highest since March 2016.
FII inflows in October stood at $2.5 billion.
It also said that the Nifty 50’s market capitalisation is at an all-time high. However, the Nifty Mid-Cap 100’s market cap is still down 24 per cent from its peak, although it is above December 2019 level.
Further, as per the report, in the past month, companies where Covid impact on business model was low have outperformed the ones where Covid impact was higher.
It noted that corporate commentary is positive on demand recovery with discretionary demand seeing an uptick during the festive season. Leverage and cash flows have also seen material improvement in the first half of FY21 against the first half of FY20.
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