Current FPI flow likely to continue in CY21

Mumbai: FPI flow for the calendar year 2021 will remain in the range for calendar year 2019-20, says a study by Kotak Securities.

This calendar year till date, the FPIs have invested $19 bn into Indian equities, which coupled with strong retail participation has helped Nifty-50 deliver strong returns since April. Mutual funds were net buyers till June but have turned net sellers since July. This year till date mutual funds have been net sellers to the tune of $3.9 bn in Indian equities. In the US, there is split congress which puts the onus of steering the economy in the hands of the Federation. The additional bond buying program of European Central Bank (ECB) and fresh stimulus by Bank of Japan (BoJ) point to a healthy double-digit $ FPI flows in the year 2021. We can expect FPI flows to remain in the range of that came in the calendar year 2019-20, which is somewhere between $15 bn and 20 bn, it says.

"We expect earnings of the Nifty-50 Index to rise by 8 per cent in the financial year FY21, 29 per cent in FY22 and by 19 per cent in FY23. FY21 forward estimates are not very relevant given the impact of Covid pandemic on domestic and global economy, which will result in a sharp decline in both volumes and profitability in many sectors," Jaideep Hansraj, MD and CEO, Kotak Securities.

We see a sharp recovery in FY22 estimated net profit, he said, coming from automobiles, banks, metals and telecom sector. Our updated free float EPS for Nifty-50 stands at Rs 488 for FY21 estimated, Rs 628 for FY22 estimated and Rs 746 for FY23 estimated. It is interesting to note that last five years' earnings CAGR of Nifty-50 has been just 2.6 per cent (FY16-20). On the low base we expect Nifty-50 earnings CAGR for the period of FY20-23 is estimated to be~18%.