The Foreign Portfolio Investors (FPIs) inflow in the month of June was dominated mainly by two companies — Reliance Industries and Kotak Mahindra Bank. According to data for the first four days of June, FPI inflow was positive by USD 2.41 billion versus USD 1.93 billion for the entire month of May 2020.
“This sudden spurt in FPI flow in first four days of June is on account of Reliance Industries’ Rights Issue closing on Tuesday 2 June and the company reporting on 3 June that the rights issue was oversubscribed by 1.59 times and also on account of Kotak Mahindra bank stake sale of 2.83 per cent by promotor Uday Kotak on June 2, 2020,” said Arjun Yash Mahajan, Head - Institutional Business, Reliance Securities.
Due to these two corporate actions/events, FPIs participated in large numbers. “Finally, add to these two events, the broader benchmark Nifty Index saw a breakout and added over 4.5 per cent since the close on May 29, 2020.”
The current rally saw money flow into automobiles, private banks, and pharmaceuticals as there was continued hope of the worst being behind. “However, this rally is based on optimism and some caution is advised at these levels. It will not hurt to book profit and sit on the sidelines to wait for better entry levels and also for more clarity to emerge of COVID-19 led disruptions caused in April and May 2020,” advised Mahajan.
