In the first two months of January and February 2023, FPIs had sold Indian equities worth $4.21 billion as global cues came under pressure. The Adani sell-off saga also contributed to FPI selling. In contrast, the month of March 2023 saw FPI buying to the tune of $966 million. However, that may not be a very representative figure.
A large chunk of the FPI flows in March 2023 were largely accounted for by the $1.9 billion purchase of Adani group shares by GQG Investments. That flow came into India on 03rd March 2023. However, post 08th March 2023, when the SVB Bank collapsed and Signature followed, the FPIs have been predominantly on the sell side. To add to the concerns of the FPIs, one of the most reputed banks in Europe, Credit Suisse, was forced into a slump sale to UBS to ensure that the run on deposits would not result in the bank collapsing.
To understand the 2023 FPI flows, one must see FPI flows in perspective from October 2021. Between October 2021 and June 2022, FPIs net sold equities worth $34 billion. The FPIs did turn net buyers in the second half of 2022. In calendar year 2022, FPIs net sold $28 billion of equities in H1-2022 but turned net buyers of equities worth $12 billion in H2-2022. Overall, FPIs were net sellers of $16 billion in Indian equities in year 2022. Year 2023 began on a negative note, but the $966 million infusion by FPIs in March comes as a welcome relief.
March 2023: Equities see net buying, but debt sells off
The table captures monthly FPI flows into equity and debt for 2022 and 2023.
Calendar Month |
FPI Flows Secondary |
FPI Flows Primary |
FPI Flows Equity |
FPI Flows Debt/Hybrid |
Overall FPI Flows |
Full Year 2022 |
(146,048.38) |
24,608.94 |
(121,439.44) |
(11,375.78) |
(132,815.22) |
January 2023 |
(29,043.32) |
191.30 |
(28,852.02) |
2,308.27 |
(26,543.75) |
February 2023 |
(5,583.16) |
288.85 |
(5,294.31) |
1,155.19 |
(4,139.12) |
March 2023 |
7,109.65 |
825.98 |
7,935.63 |
-2,036.42 |
5,899.21 |
Total for 2023 |
(27,516.83) |
1,306.13 |
(26,210.70) |
1,427.04 |
(24,783.66) |
Data Source: NSDL (all figures are Rupees in crore). Negative figures in brackets
After FPI selling of $4.21 billion in the first 2 months, March 2023 has seen FPI net buying of $966 million. That was largely on account of the GQG infusion into the Adani group stocks, in the absence of which, the FPIs would have been net sellers in March 2023 also. Here is a quick picture of the FPI macros in March 2023.
Year 2023 has begun on a dour note and even the net buying in March was skewed due to one single transaction. FPIs continue to be cautious and that is likely to keep FPI flows under pressure in the near future.
FPI equity flows in the month of March 2023
The table below gives a granular picture of daily flows into Indian equities in the month of March 2023; both in rupee and in dollar terms.
Report Date |
FPI Flow (Rs Crore) |
Cumulative Rs flows |
FPI Flow ($ million) |
Cumulative $ flow |
01-Mar-23 |
-4,642.60 |
-4,642.60 |
-561.51 |
-561.51 |
02-Mar-23 |
840.93 |
-3,801.67 |
101.87 |
-459.64 |
03-Mar-23 |
12,741.05 |
8,939.38 |
1,543.33 |
1,083.69 |
06-Mar-23 |
236.84 |
9,176.22 |
28.79 |
1,112.48 |
08-Mar-23 |
866.04 |
10,042.26 |
105.94 |
1,218.42 |
09-Mar-23 |
3,950.96 |
13,993.22 |
481.31 |
1,699.73 |
10-Mar-23 |
-453.45 |
13,539.77 |
-55.35 |
1,644.38 |
13-Mar-23 |
-1,764.36 |
11,775.41 |
-215.13 |
1,429.25 |
14-Mar-23 |
3,008.62 |
14,784.03 |
367.29 |
1,796.54 |
15-Mar-23 |
-2,208.84 |
12,575.19 |
-268.19 |
1,528.35 |
16-Mar-23 |
-1,246.69 |
11,328.50 |
-151.12 |
1,377.23 |
17-Mar-23 |
166.70 |
11,495.20 |
20.16 |
1,397.39 |
20-Mar-23 |
-1,698.69 |
9,796.51 |
-205.98 |
1,191.41 |
21-Mar-23 |
-1,905.65 |
7,890.86 |
-230.98 |
960.43 |
23-Mar-23 |
-1,044.33 |
6,846.53 |
-126.31 |
834.12 |
24-Mar-23 |
386.49 |
7,233.02 |
47.04 |
881.16 |
27-Mar-23 |
-1,456.74 |
5,776.28 |
-177.14 |
704.02 |
28-Mar-23 |
-622.75 |
5,153.53 |
-75.62 |
628.40 |
29-Mar-23 |
1,946.85 |
7,100.38 |
236.83 |
865.23 |
31-Mar-23 |
835.25 |
7,935.63 |
101.41 |
966.64 |
Data Source: NSDL
There were 2 major events that determined the direction of FPI flows in the month of March 2023.
How do we perceive FPI sentiments in April 2023?
Most of the concerns that we saw in March at a global level and domestic level are still around. Not much is likely to change in a month; on the contrary more banks may unravel in the coming month. So, there will be pulls on FPI flows from both sides. As the central banks have maintained, the rate decision will be kept independent of the banking crisis. That is easier said than done. Currently, the crisis is still in its early stages. However, if the crisis was to deepen, this kind of de-coupled policy approach may not work.
The joker in the pack will be how China story manifests. A recovery in China would mean a revival in commodity prices and that is likely to once again direct FPI flows into emerging markets like India. We have to keep our fingers crossed for April flows.
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