Post the Infrastructure Leasing and Financial Services (IL&FS) crisis last year, NBFC stocks had corrected as liquidity tightened in the debt market.
NBFCs, where FIIs' stake saw the sharpest rise, included GIC Housing (464 basis points), Power Finance Corporation (245 bps) and Reliance Capital (785 bps). Dewan Housing Finance, which had come under the spotlight on allegations of corporate governance lapses, saw the sharpest cut by FIIs (460 bps).
While FIIs have shown a healthy appetite for NBFCs, they remain less keen on capital goods and infra companies. Of the 29 capital goods names, FIIs have cut stake in 16 companies.
“In the capital goods and infra space, FIIs are currently in the wait-and-watch mode. However, their stance could change post the election,” Shroff added.
Capital goods companies where FIIs have reduced stakes include Thermax (226 bps). Diesel genset player Cummins India (221 bps) and Triveni Turbines (177 bps) are among other players where FIIs have reduced their stakes.
Foreign investors’ lack of conviction in the capital goods space is at variance with domestic fund managers, who expect capex cycle to revive in a few quarters. Mutual funds have raised stakes in 16 capital goods stocks as against 10 capital goods firms where FIIs stakes have increased their holdings.
Among the export-oriented sectors — IT and pharma — the latter has found favour among FIIs. Of 34 pharma names, FIIs’ stake was up in 21 drugmakers in the March quarter. The largest bump up in the FII stake was seen in mid-sized names such Bliss GVS Pharma (539 bps), Strides Pharma (327 bps) and Granules India (305 bps).