Dollar deluge on D-Street! FPI-favourite stocks shoot up as much as 90% in less than a month

NEW DELHI: As overseas investors return to place heavy bets on domestic equities, a host of FPI-favourite stocks are on a roll. This clearly suggests global liquidity has been the main driving force behind the latest leg of the stocks rally.

Data showed seven of every 10 heavily FPI-owned BSE500 scrips have managed to beat Sensex’s 3 per cent rise so far in August. Some of these stocks have rallied as high as 90 per cent, even when higher market valuations continue to worry analysts.

Leading the pack is VA Tech Wabag, which has rallied 90.48 per cent so far in August. FPIs owned 22.29 per cent stake in the firm as of June 30.

IDFC, where FPIs held 37.27 per cent at the end of June quarter, has seen its shares rally 52 per cent in August. Jindal Stainless (Hisar), Shriram City Union Finance and Birlasoft, where FPIs held 20-25 per cent, have soared 42-50 per cent so far this month.

August has seen the highest FII inflows to Indian equities in 118 months, or since October 2010. FPIs net purchased stocks worth $5.43 billion during the month till August 21, which was lower only than the $6.42 billion inflows seen in October 2010.

Domestic stocks have absorbed Rs 40,262 crore worth FPI money in August, compared with an aggregate Rs 43,934 crore that flowed in during the previous three months. While FPI investment in the primary market, to an extent, contributed to higher flows in recent months, the institutional investor category has become a stronger force in the secondary market of late.

Strides Pharma Science, Zee Entertainment Enterprises, Sunteck Realty, Adani Enterprises, PNB Housing Finance and Bliss GVS Pharma are some of the other FPI-heavy stocks that have jumped 30-40 per cent this month. FPIs owned 20-68 per cent stakes in these companies as of June 30.

While it would be difficult to gauge the FPI trend for August at present, data showed their buying was largely concentrated in oil & gas, IT, auto, pharma and insurance sectors in July. FPIs were seen selling shares in banks and financials last month.

In August, many of the banking stocks with high FPI stake failed to deliver returns. HDFC, where FPIs own 70.16 per cent stake, rose just 1 per cent so far. IndusInd Bank and Kotak Mahindra Bank are down 2 per cent each.

Bharat Forge, Redington (India), KPIT Technologies, Prestige Estate Projects, TeamLease Services, The Great Eastern Shipping and PVR are other FPI- heavy stocks that have risen 20-30 per cent this month. FPIs owned 20-48 per cent in these firms.

Money making ideas

Domestic markets are trading near six-month highs but analysts are advising investors to remain cautious as some correction is likely given the fast rise. “Investors and traders can follow the up-moves by strictly guarding profits at current and higher levels as sharply falling volatility remains another big worry,” said Milan Vaishnav, CMT, MSTA is a Consultant Technical Analyst and Founder of Gemstone Equity Research & Advisory Services.

Here are 14 stocks that analysts say can offer decent gains over the next two to three weeks

Out of 104 BSE500 stocks, where FPI exposure is in excess of 20 per cent, 72 have beaten Sensex’s 2.8 per cent return for the month so far. Some 16 of these stocks have gained 100-300 per cent since the BSE Sensex hit 52-week low on March 24. The 30-pack is up 50 per cent from the low level.

“FPI flows into equity can be expected to be positive as the direction of the economic prospects, though in the negative zone now, is set to improve with the progress of the ‘unlock’ charter,” said Care Ratings.