“FPIs were back as net buyers in financials last month. We wouldn’t be surprised if a major chunk of inflows would have chased PSU banks,” said Sriram Velayudhan, VP, IIFL Alternative Research. Nifty Bank gained 14 per cent in February.
Abhilash Pagaria, Senior Manager at Edelweiss Alternative Research said FPIs may have added PSU banks as well to their portfolios.
“FPIs along with private names, must have added exposure in PSU Banks as SBI gained around 40 per cent led by massive beat on all fronts- Asset quality, growth and profitability building optimism in the third quarter results. The other triggers which could have attracted FPIs in key PSU stocks are key budget announcements such as bad bank, recapitalisation of PSUs and privatisation of banks,” said Pagaria. PSUs have been severely undervalued in comparison to private banks, he added.
Nifty PSU Bank gained 32 per cent and the Nifty Private Bank index gained 11 per cent in February. So far in 2021, the PSU Bank index advanced 39 per cent and the Private Bank Index moved up 11 per cent.
In the last one year, FPIs have pumped $ 7.9 billion into financials, said Velayudhan. Banking and financials are now 34.8 per cent of FPIs’ total Assets Under Management (AUM) in India as against 33.8 per cent in January, according to Edelweiss Alternative Research.
Besides banking and financials, oil and gas, telecom and insurance sectors saw the highest inflows while autos and defensives saw the highest outflows.
