The healthcare segment is gaining traction as it has attracted foreign funds to the tune of USD 3.37 billion in January-July, which is almost half of the total overseas flow into the domestic capital market. Foreign portfolio investors (FPIs) invested USD 3.37 billion, or 49 per cent of the investment pie, in listed healthcare companies during the said period, according to a report from brokerage Kotak Institutional Equities.
For the entire 2013, net investments for the healthcare sector stood at USD 1.86 billion, and USD 309 million for 2014. Even in terms of percentage share, investor interest in healthcare of the world's second-most populous country has never been so high.
Market experts put it all down to a host of factors, including wider profit margins, increased demand for generic drugs and M&A activity in the sector. Analysts stay bullish on the sector, saying the heightened interest will continue in the near term. According to the report, energy sector came in next in the pecking order, which pulled in nearly USD 2 billion from FPIs - 29 per cent of the total inflows in the first seven months of 2015.
Industrial (USD 1.7 billion) and financial (USD 1.23 billion) sectors were the other favourites of FPIs. The data showed that the financial sector had witnessed the maximum funds inflows by overseas investors in 2013 and 2014 at USD 3.43 billion and USD 5 billion, respectively. Meanwhile, total "listed fund" activity remained negative for the second consecutive month, with outflows of USD 500 million in July.
"In contrast to broader trends, India-dedicated active funds attracted flows during the period," the report said. "FPI activity suggests that other market participants remained buyers in the market during the month."
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