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10 stocks that FPIs bought and sold the most

By Krishna Kant & Ram Prasad Sahu
May 12, 2022 08:30 IST
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The FPI holding in India’s top 100 companies, which are part of the Nifty 100 index, declined to 24.23 per cent on average at the end of March this year, from a high of 27.5 per cent at the end of March 2021. This is the lowest FPI holdings in India’s top listed companies in at least three years.

Krishna Kant & Ram Prasad Sahu report.


Illustration: Dominic Xavier/

After accumulating Indian stocks for four consecutive quarters during FY21, foreign portfolio investors (FPIs) turned net sellers in the first quarter of FY22 and continue to withdraw capital from the Indian market.

The FPI holding in India’s top 100 companies, which are part of the Nifty 100 index, declined to 24.23 per cent on average at the end of March this year, from a high of 27.5 per cent at the end of March 2021.

This is the lowest FPI holdings in India’s top listed companies in at least three years.


A general sell-off by FPIs has weighed on stock prices and the benchmark S&P BSE Sensex is down 8.5 per cent, from its 52-week high made in October 2021.

Most analysts expect FPI flows to remain weak in FY23 as well, given rising bond yields in the US and an expected earnings slowdown in India due to high inflation and commodity prices.

The yield on 10-year US government bonds touched 3 per cent levels on Monday, and is now around 2.94 per cent as against 0.52 per cent in July 2020.

While FPIs remain sellers on a net basis, they continue to raise their holdings in select stocks that are expected to see strong earnings growth in FY23.

There has been a brisk rally in these stocks, despite a weakness in the broader market.

In all, about a quarter of Nifty 100 stocks saw a rise in FPI holding in the March quarter, led by commodity producers, such as Hindalco, NMDC, Tata Steel, and ONGC, and consumer companies like ITC, Colgate Palmolive, and Bajaj Auto, and pharma majors Cipla and Sun Pharma.

Here are five stocks each, which have seen the most sell-off and buying by FPIs in the March quarter.

Historically, retail investors have made money in the market and have avoided big losses when they followed FPIs’ investment strategy.

Dumped: QoQ change in FPI holdings (in bps)

Jubilant Foodworks (-779)

The stock has underperformed its quick-service restaurant (QSR) peers over the past few months because of its CEO’s exit and weaker-than-expected Q3 performance.

The surge in input costs (wheat, palm oil) and its impact on the margin have weighed on the India franchise of Domino’s Pizza.

Price hikes taken by QSRs, including Jubilant, could partly offset this.

The key rationale for a negative view on the stock by HDFC Securities is the execution risks, along with the overhang of weak capital allocation after the CEO’s exit.

While Jubilant is trading at a premium to average valuations of listed QSR majors, as well as global peers, for the premium to sustain, improved execution under a new CEO, and ability to sustain growth and the margin shall be critical.

HDFC Life Insurance (-412)

The fall in FPIs’ stake has weighed on HDFC Life’s stock performance.

YTD, it is down 11 per cent against a 2.2 per cent fall in the Sensex.

Sell-off by FPIs has been accompanied by a weak financial performance by the company over the past few quarters.

HDFC Life’s net profit was down 2.5 per cent YoY in FY22, its worst showing in a decade.

Analysts attribute earnings decline to a spike in mortality and insurance claims due to the Covid-19 pandemic.

Brokerages expect a decline in insurance claims and thus, better earnings for HDFC Life in FY23.

The upside could be capped by rich valuation and incremental money from long-only funds moving to LIC from private insurers.

HDFC (-293)

The HDFC stock has also seen a sell-off by FPIs because of a weak financial performance by the mortgage lender in the past few quarters.

The stock is down 12.5 per cent year-to-date against a 2.2 per cent decline in the Sensex.

Analysts expect the stock price to remain under pressure in the near term due to growth challenges facing the lender because of increased competition and margin pressure in the industry.

HDFC’s valuation ratios, such as P/E multiple and P/B, are currently at a decade-low and at a significant discount to the Sensex, which may trigger ‘value buy’ by long-term investors.

P I Industries (-244)

Its Q3 performance was dented by muted showing in the domestic market, gross margin reduction due to costlier raw materials, and lower export incentives.

The custom synthesis manufacturing (CSM) segment is the key driver of PI’s sales with the order book at $1.4 billion.

The segment is expected to clock 20 per cent annual growth over the next three years.

Acquisition in the pharma space remains a key overhang on the stock.

Though the step shall diversify PI’s revenue base, the timeline and the ability to scale up will be critical.

The CSM growth runway is factored in as the stock is trading at a premium to its three-year average price-to-earnings ratio.

L&T Infotech (-244)

Larsen & Toubro Infotech (LTI) – a tier-2 IT services exporter – also witnessed a sell-off by FIIs in the March-22 quarter, after two years of accumulation by foreign investors.

The selling has negatively impacted its stock price, which is down 36 per cent year-to-date, making it one of the worst performers in the information technology space.

The poor showing by the stock can be attributed to the company’s below-par financial performance in recent quarters due to volume slowdown and tightening margin.

LTI’s net profit was up 16.8 per cent year-on-year in the March quarter, the slowest in eight quarters.

With a P/E of 36x, LTI remains one of the most expensive tier-2 IT companies, and that may cap the upside in the stock for investors.

Picked: QoQ change in FPI holdings (in bps)

Hindalco Industries (286)

Aluminium major Hindalco Industries has seen a sharp rise in FPI holding over the past two quarters as investors bet on the rise in base metal prices, globally.

The stock appreciated 32 per cent during January-March this year.

Hindalco’s stock has since corrected and is now up only 2 per cent YTD against a 2.2 per cent decline in the index.

Stocks of metals producers have recently come under pressure due to a decline in industrial metals prices, demand worries because of global recession fears, and rising energy prices.

The London Metal Exchange index is down 12 per cent, from its 52-week high made in February, and is expected to remain subdued in the near term.

Hindalco remains a contra bet for investors in an environment of high inflation, despite demand worries and margin pressure, say analysts.

Cipla (234)

The pharma major’s sales performance has been boosted by Covid portfolio revenues in India and fresh launches in the US market.

The launch momentum in the US shall help Cipla generate incremental sales of $300-500 million over the next 2-3 years, according to IIFL Research.

The company is expected to post 20-22 per cent annual growth over FY21-24 in the US generic business.

Led by the respiratory, cardiology and urology portfolio, over half its India business comprises chronic therapies.

The launch of oncology and diabetic complex products is expected to help Cipla outpace the industry growth, says Axis Securities.

Given multiple revenue growth triggers and cost reduction measures, brokerages have increased valuation multiples & their target prices.

Indus Towers (214)

Multiple rounds of stake sale by the promoters have implications for the country’s largest telecom tower company.

The positive is that the company’s receivables from Vodafone Idea (VIL) will be settled as the stake sale to Airtel will be used to clear outstanding dues in Indus Towers.

The negative for the company is rental pressure, given that VIL is struggling with higher debt and a market share loss.

Airtel’s consolidation of stake may lead to renegotiation of leasing terms which may hit revenues.

The outlook for Indus is dependent on the continuation of the three-private-player mobile market, especially the long-term viability of VIL, which accounts for 40 per cent of Indus Towers’ revenues and its exit will result in a loss at the operating profit level.

ITC (198)

Robust Q3 results and multiple rerating triggers led to the stock’s outperformance over the past few months.

Brokerages expect organised cigarette players to gain market share from illegal cigarettes (one-fourths of the market) given no tax hike for a second consecutive year.

ITC, being the leader, will be a key beneficiary of this shift, points out Edelweiss.The uptick in the agri, hotels, and paperboard businesses in the near term makes ITC an attractive bet.

ITC scores over its peers on valuations, too, with the stock trading at around 18x its FY24 earnings estimates, and its 5 per cent dividend yield provides a huge margin of safety.

Bank of Baroda (179)

The public sector has seen a sharp rise in FPI holding in the past six-quarters, helping it emerge as one of the top performers on the bourses. BoB’s stock price is up 38 per cent YTD against a 2.2 per cent decline in the Sensex.

FPI accumulation in BoB came on the back of a big jump in its earnings due to the decline in provisioning and margin expansion from a fall in interest rates.

BoB’s net profit was up 87 per cent YoY during the trailing 12-months ended December 2021, driven by higher net interest income and a 31 per cent YoY decline in provisioning.

Analysts remain bullish on the stock and expect BoB to maintain its earnings momentum in FY23.

The bank’s valuation also remains attractive with a price-to-book value ratio of 0.7x.

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Krishna Kant & Ram Prasad Sahu
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