FIIs fancy consumer durables; buy stocks worth over $1 bn in Feb

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billion into consumer durables stocks in February 2024. This figure also marks the highest influx of FII buying in this sector since January 2020. FIIs had net sold $27 million worth of consumer durables stocks in January 2020.Despite the lacklustre corporate commentary following the December quarter earnings (Q3FY24), FIIs have lapped up stocks of consumer durables companies.

Other sectors that witnessed FII buying in February included automobiles and auto components, amounting to $668 million, and healthcare services, totalling $626 million. FII interest was also evident from their acquisition of stakes in Whirlpool of India Ltd and Eureka Forbes Ltd through block deals that took place in February. Nirransh Jain, India analyst for consumer durables at BNP Paribas, explained that the consumer durables sector had been grappling with several challenges in the past couple of years.

These included an inflationary led slowdown in discretionary demand, increased costs of commodities, energy rating implementation and heightened competition. These factors have contributed to companies experiencing multi-year low margins and subsequent de-rating of stock valuations, he said. “We see a renewed interest in this sector now," Jain added.

The fact that the consumer durables sector has the potential to generate multi-year double digit revenue growth is comforting, he believes. In fact, it is not just FIIs but even domestic institutional investors (DIIs) are fond of consumer durables. The data compiled by Fisdom Research shows that there is a 7.5% month-on-month increase in mutual fund ownership in the consumer durable sector, said Nirav Karkera, head of research, Fisdom.