After dumping over $33 billion worth of Indian shares since October 2021, foreign investors are changing tack. In the past two weeks, foreign investors invested around Rs 5,000 crore on a net basis. Although that’s just around $620 million, it shows that the large scale selling is giving way to tactical buys.
Before we get into what foreign investors bought over four weeks ending July 15, we have to deal with how the Indian rupee touched a life time low of Rs.80.06 due to large selling of Indian shares by foreign investors. The Reserve Bank of India, predictably, stepped in to stem the fall as its Governor made it clear that the rupee’s volatility isn’t desirable. This is a veiled hint, from India’s monetary authority, that the RBI will intervene in the foreign exchange market to stem the rupee’s fall. This resulted in India’s foreign exchange reserves falling 3% in the past 30 days to $572.7 billion as of July 15.
The brunt of selling in the four weeks ended July 15 came from the energy sector. Foreign investors sold Rs 9,041 crore worth of shares in Indian companies in the oil, gas and coal space on a net basis. After the energy sector, the financial services space saw foreign investors sell the next highest value of Indian shares at Rs 6,573 crore from June 16 to July 15.
But there are two sectors which saw foreign investors buying up shares. These are fast moving consumer goods and capital goods. Capital goods saw a net investment of Rs 1,027 crore by foreign investors over June 16 to July 15, while the FMCG sector got a net investment of Rs 1,175 crore. The next fortnightly data update from NSDL will show if this change in trend persists, or if any move by the US Federal Reserve in hiking interest rates will shift sentiment again for foreign investors.