Foreign selling in shares eases in early June amid election results

Foreign selling in shares has eased in the first half of June following election results that indicated policy continuity, leading to increased buying interest in realty and telecom stocks, according to official data released on Friday.

Foreign portfolio investors (FPIs) sold Rs 25,586 crore worth of shares in May and began June with similar trends ahead of the June 4 election results, which initially saw record outflows, data from the National Securities Depository Ltd (NSDL) showed.

However, these outflows have decreased, resulting in net sales of only Rs 3,064 crore in the first half of June, compared to Rs 25,280 crore in the same period last month.

"Political clarity, a strong growth outlook, and the fear of missing out among FPIs will likely draw them back to domestic equities," said Siddharth Vora, head of quant investment strategy and fund manager at PL Asset Management. "Given the size and prospects of the economy and market, India is simply too significant to ignore."

The realty sector experienced the highest foreign buying, worth Rs 1,815 crore in the first half of June, NSDL data showed. Financial services recorded FPI inflows of Rs 1,008 crore, following outflows of Rs 18,200 crore over the previous two months.

Gautam Kalia, senior vice president and head of flagship product - Super Investor at Sharekhan, highlighted that multi-year investment themes, such as capex-linked infrastructure, capital goods, and real estate, remain attractive post-election results. He also pointed out that capital-linked banks, financials, and sectors linked to discretionary spending are appealing.

While FPI selling moderated in early June, retail investors and mutual funds continued to invest in domestic equities, driving the benchmark Nifty 50 index up by 4.15 per cent.

Sectoral data is available fortnightly, but daily data indicates that FPIs have turned net buyers as of June 20, with inflows amounting to Rs 10,923 crore so far this month.

(With Reuters inputs)