Foreign investors buy Indian IT, pharma stocks in August on US interest rate outlook By Reuters

BENGALURU (Reuters) – Foreign investors scooped up information technology and pharmaceuticals stocks, which earn a significant share of their U.S. earnings, in August ahead of a likely interest rate cut this month by the Federal Reserve, data showed on Thursday. .

Foreign portfolio investors (FPIs) also loaded into consumer stocks, buoyed by earnings momentum and hopes of a revival in demand due to steady monsoons in India, data from National Securities Depository Ltd (NSDL) showed.

After pumping 117.63 billion rupees ($1.40 billion) into IT stocks in July, the most since a new sector classification was implemented in 2022, FPIs last month bought IT stocks worth of 40.36 billion rupees and also bought healthcare stocks worth 51.99 billion rupees.

Buoyed by FPI inflows, the IT and pharma sub-indices rose 4.7% and 6.6% respectively in August, while the FMCG index gained 1.6%, leading the benchmark Nifty 50 by 1, 1% higher.

Recent hopes of increased tech spending in the US amid expectations of a soft landing in the economy have fueled foreign interest in IT and pharma stocks, according to VK Vijayakumar, chief investment strategist, Geojit Financial Services.

FMCG, consumer services and fast-moving consumer goods saw FPI inflows between 36 billion rupees and 50 billion rupees in August.

Bets on revival in rural demand and stable macroeconomic outlook have sparked renewed interest in consumer-related sectors, according to two analysts.

“The bottom line is private consumption growth is showing signs of revival and is reflected in the sector’s strong earnings performance in the June quarter,” said Ajit Banerjee, chief investment officer at Shriram Life Insurance.

“Good progress of monsoon also maintains hope of good agricultural production and could lead to improvement in rural demand,” Banerjee added.

Buoyed by rising expectations of a US interest rate cut in September, overall FPI inflows into Indian equities turned positive in August, reversing outflows in the first half of the month.

($1 = 83.9530 INR)