What FIIs bought and sold in India in February 2022?

In Feb-22, the selling was relentless in both halves of the month. If FPIs sold $1.70 billion in the first half, they sold equities worth $3.01 billion in the second half of Feb-22.

March 07, 2022 8:30 IST | India Infoline News Service
The one big change between January and February 2022 was the worsening geopolitical situation. In Feb-22, the Russian tanks actually rolled into Ukraine. Over next few days, we not only saw worsening of the geopolitical balance but Western nations imposed stringent sanctions on Russia. This raised the spectre of oil shortages sending Brent crude up to $120/bbl. Fed hawkishness and India’s macro vulnerability were the big challenges.

Under these conditions, heavy FPI selling was inevitable. In Jan-22, FPIs sold $4.46 billion of equities and there was additional selling of $4.71 billion in Feb-22. FPIs have already sold over $10 billion in 2022. In Feb-22, the selling was relentless in both halves of the month. If FPIs sold $1.70 billion in the first half, they sold equities worth $3.01 billion in the second half of Feb-22. Here is the breakup of Assets Under Custody (AUC) of foreign portfolio investors (FPIs) at the close of Feb-22.

Assets Under Custody (AUC)
of FPIs - $ Billion (Feb-22)
Banks 107.82
IT Services 84.94
NBFCs 74.75
Oil & Gas 63.55
FMCG 34.63
Pharma & Health 28.03
Utilities 25.93
Automobiles 25.55
Capital Goods 19.29
Consumers 17.31
Metals 15.25
Telecom 14.41
Insurance 12.75
Cement 10.75
Retailing 10.68
Chemicals 10.20
Other 24 Industry Groups 47.55
Total AUC 603.39
 Data Source: NSDL

How the FPI AUC sectoral mix changed in Feb-22

The table above covers the top 16 sectors where AUC is more than $10 billion. Out of 40 sectors that FPIs invest in, AUC of the top-16 sectors accounted for 92.12% of the total FPI AUC of $603.39 billion. The Feb-22 AUC at $603.39 billion is down 5.6% over Jan-22 and down 7.7% over Dec-21 levels. Financials and IT stocks took it on their chin in Feb-22.

Financials, comprising banks, NBFCs and insurance account for 32.37% of FPI AUC, which approximately matches with the weight of financials in the Nifty. The other significant AUC contributors are IT at $84.94 billion, Oil & Gas $63.55 billion, FMCG $34.63 billion, Healthcare $28.03 billion and automobiles $25.55 billion. The AUC depletion was limited in the case of healthcare sector and consumer durables sector.

The value depletion was visible in all the other sectors. Financials including banks, NBFCs and insurance led the fall in AUC. Even IT and FMCG AUC came under pressure during Feb-22 due to operating cost pressures. In the case of Oil & Gas, the AUC fell despite the spike in crude prices. Indian oil companies can only realize gains of steep crude prices up to a point; after that it becomes counterproductive. The only sector to see increase in AUC and better AUC rankings was metals. The metal stocks saw robust price performance as expected shortages drove up LME prices.

What sectors did FPIs buy into in Feb-22

FPIs sold $4.71 billion in Indian equities in Feb-22. This takes the total FPI selling in last 5 months to $14.33 billion on a net basis; after adjusting for the IPO inflows of FPIs.

Data Source: NSDL

With $4.71 billion of net selling by FPIs in Feb-22, it was obvious that selling sectors would dominate buying sectors in this sea of red. However, there was net buying visible in a few sectors. FPIs were net buyers to the tune of $357 million in metal stocks, being the only sector to hold up. The Russian crisis led to a sharp spike in the prices of metals and minerals on the LME, benefiting most of the metal companies in India. Robust Q3 numbers also helped. Pharma also saw net inflows of $85 million as FPIs indulging in safe haven buying.

Sectors that FPIs sold into in Feb-22

FPI selling in Jan-22 was again dominated by IT sector. IT stocks corrected sharply on OPM worries and fears of weak IT spending in FY23. FPIs sold $1,454 million worth of IT shares in Feb-22. Like in the previous month, FPIs were also heavy sellers in NBFCs, selling stocks worth $1,169 million. FPIs expect RBI to hike rates and that is not good news for NBFCs.

Oil & Gas saw FPI outflows of $498 million and insurance saw FPI outflows of $353 million in Feb-22. Despite higher crude prices, there are concerns that oil companies may be called upon to share part of the price burden. Also, with the worsening geopolitics, the operating risk is likely to increase for insurance companies. In addition, FMCG saw outflows of $299 million on operating cost worries. Automobiles saw FPI selling of $243 million on input cost and rate hike concerns. It was a double whammy for auto stocks.

Among other sectors to witness heavy FPI selling were Capital Goods ($188m), Banks ($159m), Cement ($153m), Chemicals ($140m) and Consumer Durables ($133m). Smaller sell-offs were seen in realty and media stocks. While realty was hit by rate concerns, media was about FPI selling in Zee. Like Jan-22, Feb-22 also was a tentative month for FPIs.

IPO versus Secondary Market flows of CY 2021 and 2022
Calendar Year
FPI Flows -
Secondary Markets
FPI Flows -
FPI Flows
FPI Flows
Year 2021 -7,070.50 +10,830.64 +3,760.14 +3,760.14
January 2022 -4,437.78 -22.04 -4,459.82 -4,459.82
February 2022 -5,144.48 +402.23 -4,742.25 -9,202.07
Data Source: NSDL (all figures in $ million)

If you look at the cumulative FPI flows till Feb-22, the outflows of $9.20 billion in the first two months of 2022 has offset the inflows of $3.76 billion in calendar year 2021, more than twice over. Unlike in CY2021, when FPIs were aggressively buying into IPOs, that trend is not yet visible in year 2022. A clearer picture should emerge once the IPO story picks up steam in 2022.

The entire scenario could change for the better once the LIC IPO dates are announced. It could trigger heavy inflows into India from foreign investors. But for that to happen, the geopolitical situation must normalize first. Till then pressure on flows is likely to continue.

Invest wise with Expert advice



Open Demat Account

Invest wise with Expert advice

By continuing, I accept the Terms & Conditions and agree to receive updates on Whatsapp