FPI favourites: YES Bank, REC, Power Grid, Bandhan Bank, Coforge shares rally amid strong Dec inflows

Foreign portfolio investor (FPI) favourite stocks from the BSE200 index such as REC Ltd, Power Grid Corporation Of India Ltd, YES Bank Ltd, Info Edge (India) Ltd, Persistent Systems Ltd and Bandhan Bank Ltd climbed up to 24 per cent in December. The rally in these stocks have been seen, as foreign flows into India jumped to Rs 42,733 crore this month, the highest since July's Rs 46,618 crore inflows, as US bond yields drop sharply on hopes the US Fed could cut interest rates three times next week.

REC Ltd, where FPIs held 20.36 per cent stake at the end of September quarter, climbed 23.84 per cent in December till Friday. Power Grid Corporation Of India Ltd, where FPIs owned 36 per cent stake at the end of second quarter, rose 13.63 per cent, data compiled from corporate database AceEquity suggests.

Also read: YES Bank shares hit 52-week high, overbought on charts; what’s next?

YES Bank gained 13.33 per cent to R 21.93 per cent this month. FPIs owned 23.39 per cent stake in the private bank as on September 30. Info Edge climbed 12.19 per cent while Persistent Systems Ltd advanced 12.76 per cent during the same period. FPI ownership in Info Edge stood at 31.21 per cent and Persistent Systems at 21.26 per cent.

FPIs infused Rs 9,001 crore into domestic equities in November and were net sellers to the tune of Rs 24,548 crore and Rs 14,768 crore, respectively, in October and September. While the Fed commentary helped, the state election results in India and the RBI’s monetary policy outcome on maintaining status quo on rates also made FPI’s stand on India markets positive, said Manoj Purohit, Partner & Leader - FS Tax, Tax & Regulatory services, BDO India.

"The other factors contributing FPIs to pump liquidity in Indian market are RBI’s inflation forecast at 5.4 per cent, positive signs on improved capex and valuations," Purohit said.

"We see the momentum intensifying as risk on trades comes back into play. India will remain one of the most attractive emerging markets given its size and growth profile, especially considering the challenges of investing in China. Historical trends noisy. The initial leg of rate-cut cycles has had mixed results for equities over the last 15 years (see Exhibit 2 on page 2). The strike rate for a positive reaction is 3/4, mostly captured in the run-up to the cut. The additional wrinkle in this cycle is that we are entering the rate-cut cycle on the back of strong growth. The sectoral performance around the rate cycle’s peaks is also mixed," Emkay Global said in a note.

Bandhan Bank Ltd, Larsen & Toubro Ltd, Coforge Ltd, Cholamandalam Investment and Finance Company Ltd, ICICI Bank Ltd, Container Corporation Of India Ltd and LIC Housing Finance Ltd are a few FPI favourite stocks, which have climbed in double digits this month. For study, only those BSE200 shares were selected where FPI ownership was in excess of 20 per cent at the September quarter end.

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