FPIs net buyers of Indian stocks upto mid-March due to GQG's Adani investment-NSDL data

BENGALURU (Reuters) - U.S. boutique investment firm GQG Partners' $1.87 billion investment in four Adani Group companies in early March single-handedly helped foreign portfolio investors (FPI) record net purchases of Indian equities in the first half of the month.

FPIs bought equities worth 125.75 billion rupees ($1.52 billion) between March 1 and 15, the most since November 2022, according to National Securities Depository Ltd (NSDL) data.

Excluding GQG's investment, FPIs would have extended their two-month-long selling streak into the first half of March.

(GRAPHICS: FPIs snap selling streak in first half of March https://www.reuters.com/graphics/FPI-MAR21/MAR21-FPI/dwvkdkzropm/chart.png)

Analysts expect that foreign selling in domestic equities is likely to continue for a few more months due to fears of a global banking contagion after the collapse of Silicon Valley Bank and Credit Suisse, among others.

"Expect more worms to come out," said Aishvarya Dadheech, fund manager at Ambit Asset Management.

The fall of U.S. regional banks is a dampener for both the interest rate cycle and inflation as the Fed will be expected to go slow on further rate hikes, said G Chokkalingam, founder and chief investment officer at Equinomics Research.

It will take at least three to four months for FPIs to get confidence in Indian equities, he added.

The benchmark Nifty 50 fell nearly 2% in the first half of March compared to a 1.5% slide in MSCI's broadest index of Asia-Pacific shares outside Japan

THE PURCHASES AND SALES

Foreign investors bought over 66 billion rupees worth of shares in the services sector, while the power and automobiles segments witnessed inflows of more than 30 billion rupees each.

(GRAPHICS: Sectoral FPI flows in first half of March https://www.reuters.com/graphics/SEC-FPIM1/FPIM1-SEC/akpeqeoqxpr/chart.png)

FPIs dumped over 37 billion rupees worth of equities in the information technology sector in the first half of March, having bought nearly 11 billion rupees worth of equities in February.

The U.S. banking, financial, services and insurance (BFSI) sectors is a key revenue segment for Indian IT firms and a banking crisis will hurt inflows and growth in these firms, analysts said.

The BFSI contribution to the revenue of IT companies like Tata Consultancy Services, Infosys and Wipro is above 25%, according to earnings reports. ($1 = 82.6700 Indian rupees)

(Reporting by Bharath Rajeswaran in Bengaluru; editing by Eileen Soreng)

By Bharath Rajeswaran