By Bharath Rajeswaran
(Reuters) -India’s financial stocks captured the lion’s share of foreign portfolio investor inflows in October, as overseas funds returned to the market after three straight months of selling.
Net foreign inflows into Indian equities rose to a five-month high of 146.10 billion rupees ($1.66 billion) in October, data from the National Securities Depository showed on Friday.
Financial shares received 132.79 billion rupees, or 91% of the total inflows, as investors bet on steady earnings and attractive valuations.
CREDIT GROWTH REBOUND
“Credit growth in financials is set to rebound after a rough patch,” said Aditya Sood, fund manager at InCred Asset Management.
“The most attractive basket in Indian markets right now is financials — valuations are reasonable, and if earnings grow 10%-12% as expected, FPIs will keep coming back.”
While uncertainty over trade with the U.S. could keep markets volatile, “India hasn’t been this cheap in a decade with the exception of the COVID-19 decline”, Sood said.
Foreign investors have net sold 98.45 billion rupees of shares in the three trading sessions in November, depository data showed.
BENCHMARKS SCORE
Foreign buying, coupled with a strong earnings season, helped India’s benchmark indexes, the Nifty 50 and Sensex, rise about 4.5% in October, their strongest monthly gain in seven months.
State-owned banks surged 8.7% during the month, leading sectoral advances, while private banks, the broader banking index, and financials climbed between 4% and 6%.
Top private lender HDFC Bank posted upbeat quarterly results, while Axis Bank reported improved asset quality and lower credit cost.
OIL AND GAS BOOST
Oil and gas stocks attracted net inflows of 91.29 billion rupees in October, driven by strong earnings from oil-to-telecom conglomerate Reliance Industries, whose retail division benefited from festive demand.
The oil and gas index advanced 6.3%, with Reliance shares jumping 9%.
($1 = 87.8950 Indian rupees)
(Reporting by Bharath Rajeswaran in Bengaluru; Editing by Mrigank Dhaniwala)
