Energy, financials top picks of FIIs in Feb

FIIs: Extremely followed the maxim of the market is to go after smart money, referring to investments by institutional investors. While it looks like financial and energy stock are the flavor of the season.

Moreover, a BofA Securities analyst said foreign institutional investors have piled on shares of financial and energy stocks in February, hoping for a better earnings performance as the economy improves.

FII flows are uneven in favor of financials ($2.2 billion), energy ($874 million), and telecom ($256 million); Whereas IT ($317 million), staples ($152 million), and discretionary ($95 million) saw outflows,” said Amish Shah of BofA Securities.

On the other side, mainly follow with our strategy views of being underweight on IT, discretionary and staples and overweight on the financial sector,” the brokerage said. While it is also overweight on materials on improving Capex visibility.

However, On February 2021 was the fifth month of consecutive inflows, which increased $3.5 billion from $2.7 billion in January. Between the fund categories, active funds were a major driver of flows ($3.5 billion) while passive funds invested $84 million.

At the end of February within the NSE universe, FIIs continued to maintain the NSE universe. FIIs continued to maintain overweight positions in energy, financials, IT while being underweight on materials, industrials, and utilities. We expect the positioning to increment shift in favor of materials and industrials sectors,” said Shah.

DIIs remain bearish;

FII optimism has been delicately counterbalanced by selling by domestic institutional investors (DIIs). While there were outflows of $294 million in February 2021. Active funds continued to see redemption for the eighth month in a row, with cumulative redemptions at $9.6 billion thanks to withdrawals across fund types. On the other hand, SIP inflow remained steady over the past few months at $1.0 billion. Besides, retail trading activity has normalized to 62 percent of total market volumes against 70 percent at peak and 49 percent in long-term average.