Overseas investors have raised stakes in these 33 Nifty firms; Should you follow them?

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Heavy inflows by foreign institutional investors (FIIs) took the benchmark equity indices to their record high levels in the ongoing financial year. Data available with depository NSDL showed that they have bought shares worth over Rs 2.60 lakh crore in FY21 despite uncertainty in the form of Covid-19.

In the Nifty50 index, they have increased stake in at least 33 companies from across the sectors including banking and financial, healthcare, automobile and FMCG. All of their top picks from the Nifty pack have delivered a positive return to investors with Hindalco gaining the most 279% since March lows.

FIIs have increased their stake in the company to 22.79% as of December 31 from 18.68% in March 2020. IndusInd Bank (up 226%), Adani Ports (up 223%), Mahindra & Mahindra (up 216%) and Tata Steel (up 171%) have also rallied over 150% during the same period.

Brokerages are bullish on a couple of FIIs favourites. For instance, LKP Securities has a ‘Buy’ rating on Mahindra & Mahindra with a price target of Rs 974.

“We have increased our FY2021-22E EPS by 5-10% due to higher volume and EBIT margin assumptions for the automotive business. We also expect tractor segment demand to remain buoyant given a strong rural economy amid normal monsoon and increased government spending,” the brokerage said.

Commenting on Adani Ports, Sanjiv Bhasin, Director of IIFL Securities said, “Infrastructure & logistics is the place to be in as the global trade opens ups. The port business has a very good EBIDTA margin and will see more traction with the current announcements. Global trade is on the way up, despite the stock being expensive there is still room for upside and can cross Rs 1,000-mark in 2021.”

Adani Ports and Special Economic Zone Limited (APSEZ) the largest commercial ports operator in India accounts for nearly one-fourth of the cargo movement in the country. Its presence across 12 domestic ports in seven maritime states of Gujarat, Maharashtra, Goa, Kerala, Andhra Pradesh, Tamil Nadu and Odisha presents the most widespread national footprint with deepened hinterland connectivity.

Axis Bank, Wipro, RIL, Infosys, UltraTech Cement, Bajaj Finserv, Bajaj Finance, Cipla, L&T, Hero MotoCorp, State Bank of India, ICICI Bank, HDFC Bank, ONGC, HDFC Life, Divi’s Lab, Eicher Motors, Titan, TCS, SBI Life, HDFC, Kotak Bank, Maruti, Shree Cement, Asian Paints, Britannia, Nestle and HUL stood among other Nifty companies in which global investors raised their holdings between March-December 2020. Shares of the companies have gained between 7%-145% since March 24.

Mogan Stanley is positive on SBI with a price target of Rs 600. On the other hand, Antique Stock Broking prefers Wipro with a target of Rs 450.

Things to know: Who are FIIs? : FIIs are foreign institutional investors or funds that create large equity exposures to emerging markets like India. The sheer volumes and size of money flow by FIIs in and out of the Indian equity markets tends to greatly amplify the market swings.