What FIIs bought and sold in India in July 2022?
- India Infoline News Service
- 08 Aug , 2022
- 9:56 AM
The total FPI inflow of $634 million would look paltry in comparison to the $35 billion of equities that FPIs have sold since October 2021. However, it gives hope that the trend of persistent FPI selling may have been finally reversed. Of course, we need to wait for more confirmation from FPI flows in the next few months. The impact of the market rally was also visible in the Assets under Custody (AUC) of the FPIs. It had fallen from $667 billion in October 2021 to $523 billion at the end of June 2022. In July it picked up to $569 billion. It is still way below the peak but the bounce amidst such challenging global conditions is surely a feel-good factor.
To understand the extent of the shift, look at FPI flows since the start of 2022. In January 2022, FPIs sold $4.46 billion of equities and $4.71 billion in February 2022. In March 2022, FPIs sold $5.38 billion, while April 2022 saw subdued FPI selling at $2.36 billion. However, net FPI selling in equities surged to $5.16 billion in May 2022 and $6.39 billion in June 2022. In comparison, July 2022 inflows of $634 million, albeit small, comes as a whiff of fresh air.
July 2022 was again an IPO drought. FPIs sold $0.930 billion in first half and bought equities worth $1.564 billion in the second half of June 2022. Here is the AUC standing, sector-wise.
Data Source: NSDL
Quick look at the AUC mix in July 2022
The table above captures the top 13 sectors with AUC more than $10 billion. NSDL has modulated the list from 40 sectors to 23 sectors. Out of these 23 sectors that FPIs invest in, AUC of the top-13 sectors accounted for 92.94% of total FPI AUC of $569.43 billion. The July 2022 AUC at $569.43 billion is up +8.8% over the June 2022 AUC. However, since the peak of October 2021, the FPI AUC is down -14.6%.
How does the sector mix of AUC stack up? Financials, comprising banks, NBFCs and insurance accounted for 31.9% of overall FPI AUC, which corresponds to the approximate Nifty weight too. The other significant AUC contributors were Oil & Gas $67.65 billion, Information Technology $65.88 billion, FMCG $38.25 billion, Automobiles $31.09 billion, Power $28.17 billion, Healthcare $26.26 billion and Consumer durables $21.12 billion. AUC gains were across the board with FMCG gaining the most in percentage terms. However, it must be remembered that this AUC spike in July 2022 is largely on account of the spike in the stock market indices and a sharp rally across stocks.
Finally, there was some good news in July 2022. The trend of FPI selling which started in October 2021 got nixed (hopefully) after nine persistent months of selling; when FPIs took out $35 billion from Indian markets. Despite this bounce in July, FPI holdings in Indian stocks are still $98 billion below the peak AUC that FPIs touched in October 2021.
FPIs and the sectoral buying story of July 2022
Data Source: NSDL
FPIs bought $634 million in Indian equities in July 2022. It must be noted that FPIs were net sellers in the first half of July with the sentiments turning around only in the second half. Out of the 23 sectors where FPI flows are tracked by NSDL, FPIs were net sellers in 7 sectors in June 2022,neutral on 3 sectors and buyers in the rest of the sectors. Like in June 2022, the IPO market was quiescent even in July 2022 with not a single IPO hitting the market. Clearly, the post-listing experience of LIC has left the IPO issuers with a lot to chew over.
The buying was strongest in telecom at $576 million and FMCG at $537 million. Telecom did attract a lot of buying interest ahead of the 5G auctions while FMCG companies had hinted at solid top line growth despite pressure on operating margins. Rural sales also surprised positively in the quarter. On the positive side, capital goods saw buying of $241 million and power sector of $204 million. While power buying was more a renewable bet, capital goods may be the first signs of the capital cycle turning around. There were smaller chunks of buying in financials, construction, cement and the automobile sectors too.
Selling by FPIs was much narrower in July 2022
For a change, the selling was a lot more muted in July 2022, although there were sectors that saw net selling by the FPIs. The oil and gas sector saw net selling of $661 million. This was actually concentrated in a short span of a few days after the windfall tax was introduced on exports of petrol and diesel as well as oil extracted in India. This led to aggressive selling in stocks like Reliance and ONGC, where the upstream pressure was the most. Another sector that saw aggressive selling was IT at $585 million. This was in the immediate aftermath of the results announcement. Most IT stocks saw aggressive selling as the quarterly numbers showed weak guidance and attrition pressure on operating margins.
Apart from IT and hydrocarbons; the other 2 sectors that saw selling to a lesser extent were metals and chemicals. This was more on concerns over a forced slowdown in China as it targeted a zero COVID policy, leading to a spate of business shutdowns in key cities.
FPI flows into IPOs and secondary markets in calendar 2022
Data Source: NSDL (all figures in $ million)
If you look at the cumulative FPI flows for calendar 2022 till July, the net outflows of $27.82 billion is still intimidating. However, the positive takeaway is that July 2022 has been the first positive month for FPI flows into equities after 9 months of selling. The positive takeaway is that August has also begun on a positive note and we may get a positive picture once the IPOs get back to regular stream.
One factor that could drive positive flows by FPIs is the rupee bottoming around Rs80/$. That could incentivize FPI flows in terms of dollar adjusted returns. For that, the focus of the FPIs would be rivetted on the current account deficit.
To understand the extent of the shift, look at FPI flows since the start of 2022. In January 2022, FPIs sold $4.46 billion of equities and $4.71 billion in February 2022. In March 2022, FPIs sold $5.38 billion, while April 2022 saw subdued FPI selling at $2.36 billion. However, net FPI selling in equities surged to $5.16 billion in May 2022 and $6.39 billion in June 2022. In comparison, July 2022 inflows of $634 million, albeit small, comes as a whiff of fresh air.
July 2022 was again an IPO drought. FPIs sold $0.930 billion in first half and bought equities worth $1.564 billion in the second half of June 2022. Here is the AUC standing, sector-wise.
|
Industry Group |
Assets Under Custody (AUC) of FPIs - $ Billion (July 2022) |
| Financials | 181.64 |
| Oil & Gas | 67.65 |
| IT Services | 65.88 |
| FMCG | 38.25 |
| Automobiles | 31.09 |
| Power | 28.17 |
| Healthcare and Pharma | 26.26 |
| Consumer Durables | 21.12 |
| Metals & Mining | 16.88 |
| Telecom | 13.58 |
| Capital Goods | 13.22 |
| Consumer Services | 12.98 |
| Chemicals | 12.49 |
| Top 13 Sectors | 529.21 |
| Other 10 sectors | 40.22 |
| Total FPI AUC | 569.43 |
Quick look at the AUC mix in July 2022
The table above captures the top 13 sectors with AUC more than $10 billion. NSDL has modulated the list from 40 sectors to 23 sectors. Out of these 23 sectors that FPIs invest in, AUC of the top-13 sectors accounted for 92.94% of total FPI AUC of $569.43 billion. The July 2022 AUC at $569.43 billion is up +8.8% over the June 2022 AUC. However, since the peak of October 2021, the FPI AUC is down -14.6%.
How does the sector mix of AUC stack up? Financials, comprising banks, NBFCs and insurance accounted for 31.9% of overall FPI AUC, which corresponds to the approximate Nifty weight too. The other significant AUC contributors were Oil & Gas $67.65 billion, Information Technology $65.88 billion, FMCG $38.25 billion, Automobiles $31.09 billion, Power $28.17 billion, Healthcare $26.26 billion and Consumer durables $21.12 billion. AUC gains were across the board with FMCG gaining the most in percentage terms. However, it must be remembered that this AUC spike in July 2022 is largely on account of the spike in the stock market indices and a sharp rally across stocks.
Finally, there was some good news in July 2022. The trend of FPI selling which started in October 2021 got nixed (hopefully) after nine persistent months of selling; when FPIs took out $35 billion from Indian markets. Despite this bounce in July, FPI holdings in Indian stocks are still $98 billion below the peak AUC that FPIs touched in October 2021.
FPIs and the sectoral buying story of July 2022
Data Source: NSDL
FPIs bought $634 million in Indian equities in July 2022. It must be noted that FPIs were net sellers in the first half of July with the sentiments turning around only in the second half. Out of the 23 sectors where FPI flows are tracked by NSDL, FPIs were net sellers in 7 sectors in June 2022,neutral on 3 sectors and buyers in the rest of the sectors. Like in June 2022, the IPO market was quiescent even in July 2022 with not a single IPO hitting the market. Clearly, the post-listing experience of LIC has left the IPO issuers with a lot to chew over.
The buying was strongest in telecom at $576 million and FMCG at $537 million. Telecom did attract a lot of buying interest ahead of the 5G auctions while FMCG companies had hinted at solid top line growth despite pressure on operating margins. Rural sales also surprised positively in the quarter. On the positive side, capital goods saw buying of $241 million and power sector of $204 million. While power buying was more a renewable bet, capital goods may be the first signs of the capital cycle turning around. There were smaller chunks of buying in financials, construction, cement and the automobile sectors too.
Selling by FPIs was much narrower in July 2022
For a change, the selling was a lot more muted in July 2022, although there were sectors that saw net selling by the FPIs. The oil and gas sector saw net selling of $661 million. This was actually concentrated in a short span of a few days after the windfall tax was introduced on exports of petrol and diesel as well as oil extracted in India. This led to aggressive selling in stocks like Reliance and ONGC, where the upstream pressure was the most. Another sector that saw aggressive selling was IT at $585 million. This was in the immediate aftermath of the results announcement. Most IT stocks saw aggressive selling as the quarterly numbers showed weak guidance and attrition pressure on operating margins.
Apart from IT and hydrocarbons; the other 2 sectors that saw selling to a lesser extent were metals and chemicals. This was more on concerns over a forced slowdown in China as it targeted a zero COVID policy, leading to a spate of business shutdowns in key cities.
FPI flows into IPOs and secondary markets in calendar 2022
|
Calendar Year 2021 |
FPI Flows - Secondary Markets |
FPI Flows - IPOs |
Overall FPI Flows |
Cumulative 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 |
| March 2022 | -5,244.75 | -140.19 | -5384.94 | -14,587.01 |
| April 2022 | -2,180.02 | -56.21 | -2,236.23 | -16,823.24 |
| May 2022 | -5,860.97 | +682.78 | -5,178.19 | -22,001.43 |
| June 2022 | -6,429.51 | -7.09 | -6,436.60 | -28,438.03 |
| July 2022 | -4.58 | +622.63 | +618.05 | -27,819.98 |
If you look at the cumulative FPI flows for calendar 2022 till July, the net outflows of $27.82 billion is still intimidating. However, the positive takeaway is that July 2022 has been the first positive month for FPI flows into equities after 9 months of selling. The positive takeaway is that August has also begun on a positive note and we may get a positive picture once the IPOs get back to regular stream.
One factor that could drive positive flows by FPIs is the rupee bottoming around Rs80/$. That could incentivize FPI flows in terms of dollar adjusted returns. For that, the focus of the FPIs would be rivetted on the current account deficit.
What FIIs bought and sold in India in June 2022?
- India Infoline News Service
- 06 Jul , 2022
- 9:17 AM
Let us first put things in perspective. In October 2021, when the Sensex was at the peak, the total assets under custody (AUC) of the FPIs stood at $667 billion. A full 9 months later, the FPI AUC stands at $523 billion. That is a fall of $144 billion in last 9 months or -21.6%. While $35 billion of funds went out of India, the balance $109 billion is value depletion. This has been one of the sharpest 9-month fall in FPI AUC since FPIs started investing in India in 1993.
Now, back to brass tacks. June 2022, not only sustained the FPI selling momentum but saw a sharpening of the intensity. Look at the FPI equity numbers in last 6 months. In January 2022, FPIs sold $4.46 billion of equities and another $4.71 billion in February 2022. In March 2022, FPIs sold $5.38 billion, while April 2022 saw subdued FPI selling at $2.36 billion. Net selling in equities was elevated at $5.16 billion in May 2022 and $6.39 billion in June 2022. FPIs have now sold over $29 billion in Indian equities in the first six months of 2022.
In June 2022 there was a virtual drought of IPOs. FPIs sold equal amounts of $3.2 billion in the first half and the second half of June 2022.
Here is the AUC standing, sector-wise.
Data Source: NSDL
Quick look at the AUC mix in June 2022
The table above captures the top 13 sectors with AUC more than $10 billion. NSDL has modulated the list from 40 sectors to 23 sectors. Out of these 23 sectors that FPIs invest in, AUC of the top-13 sectors accounted for 93.25% of total FPI AUC of $523.42 billion. The June 2022 AUC at $523.42 billion is down -7.86% over May 2022 AUC. Since the peak of October 2021, FPI AUC is down -21.4%.
How does the sector mix of AUC stack up? Financials, comprising banks, NBFCs and insurance accounted for 31.1% of overall FPI AUC, which is the approximate Nifty weight too. The other significant AUC contributors were Oil & Gas $68.27 billion, Information Technology $64.64 billion, FMCG $33.68 billion, Automobiles $29.11 billion, Power $24.81 billion, Healthcare $24.73 billion and Consumer durables $18.21 billion. AUC depletion was prominent in financials, IT and metals. Oil was strong through the month, except towards the last week.
The only sector that held on to its AUC in June 2022 was automobiles.
To sum it up, there was no let-up in FPI selling in June 2022. The trend of FPI selling which started in October 2021 has been building up for 9 months now and FPIs have already sold equities worth $35 billion in this period. In the process, the FPI holdings in Indian stocks is also down by $144 billion in the last 9 months, one of the worst falls in FPI memory.
What were the sectors that FPIs bought into in June 2022
Data Source: NSDL
FPIs sold $6.4 billion in Indian equities in June 2022. Logically, selling sectors dominated. Out of the 23 sectors where FPI flows are tracked by NSDL, FPIs were net sellers in 21 sectors in June 2022. IPO market was quiescent in June 2022 with not a single IPO hitting the market. Normally, that provides some flow respite from FPIs.
There was only one sector where there was some decisive buying visible from FPIs. Capital goods sector saw inflows of $166 million and many foreign investors have been discovering pockets of value in the capital goods space for some time now. This reflects the perception that as a post-COVID recovery gathers steam, the first beneficiary would be the capital investment cycle. But, we have to wait and watch!
FPI selling was again relentless in June 2022
Like in the previous months, FPI selling was $1.74 billion in financials, which is hardly surprising. Financials have the highest weight in the indices and are the most widely owned. As the global economy faces tighter monetary conditions and higher bond yields, financials are likely to be worst hit in terms of loan offtake and investment valuations. Selling was also prominent in IT $791 million, consumer durables $666 million, metals & mining $511 million and Telecom $485 million.
Among other sectors that saw strong FPI outflows, oil & gas saw outflows of $463 million, power $345 million, automobiles $316 million and FMCG $310 million. In the last few months, we have seen one of the worst bouts of risk-off selling by the FPIs. The selling is not just in India but across Asian EMs. Across Taiwan, South Korea, India and Indonesia; the FPIs have sold close to $41 billion in the June 2022 quarter. As they say, amidst uncertainty, money still gravitates to the developed markets.
FPI flows into IPOs and secondary markets in 2022
Data Source: NSDL (all figures in $ million)
If you look at the cumulative FPI flows till June 2022, outflows of $28.44 billion in the first 6 months of 2022 is accentuation of the FPI selling trend that started in October 2021. It has offset the overall inflows in 2021 by 7.56 times. The reason is that the secondary market selling in the first six months of 2022 has been four times the full year selling in 2021, but IPO flows in 2022 have just been a fraction of 2021. Therein lies the dichotomy.
The first half has been mixed for the IPO market with FPI interest limited in LIC IPO, although they did show interest in Delhivery IPO. In 2020, FPI flows returned with a bang after the pandemic. It remains to be seen if that kind of a bounce can be replicated in 2022 and 2023?
Now, back to brass tacks. June 2022, not only sustained the FPI selling momentum but saw a sharpening of the intensity. Look at the FPI equity numbers in last 6 months. In January 2022, FPIs sold $4.46 billion of equities and another $4.71 billion in February 2022. In March 2022, FPIs sold $5.38 billion, while April 2022 saw subdued FPI selling at $2.36 billion. Net selling in equities was elevated at $5.16 billion in May 2022 and $6.39 billion in June 2022. FPIs have now sold over $29 billion in Indian equities in the first six months of 2022.
In June 2022 there was a virtual drought of IPOs. FPIs sold equal amounts of $3.2 billion in the first half and the second half of June 2022.
Here is the AUC standing, sector-wise.
|
Industry Group |
Assets Under Custody (AUC) of FPIs - $ Billion (Jun 2022) |
| Financials | 162.77 |
| Oil & Gas | 68.27 |
| IT Services | 64.64 |
| FMCG | 33.68 |
| Automobiles | 29.11 |
| Power | 24.81 |
| Healthcare and Pharma | 24.73 |
| Consumer Durables | 18.21 |
| Metals & Mining | 14.56 |
| Telecom | 13.01 |
| Capital Goods | 11.75 |
| Consumer Services | 11.52 |
| Chemicals | 11.07 |
| Top 13 Sectors | 488.11 |
| Other 10 sectors | 35.31 |
| Total FPI AUC | 523.42 |
Data Source: NSDL
Quick look at the AUC mix in June 2022
The table above captures the top 13 sectors with AUC more than $10 billion. NSDL has modulated the list from 40 sectors to 23 sectors. Out of these 23 sectors that FPIs invest in, AUC of the top-13 sectors accounted for 93.25% of total FPI AUC of $523.42 billion. The June 2022 AUC at $523.42 billion is down -7.86% over May 2022 AUC. Since the peak of October 2021, FPI AUC is down -21.4%.
How does the sector mix of AUC stack up? Financials, comprising banks, NBFCs and insurance accounted for 31.1% of overall FPI AUC, which is the approximate Nifty weight too. The other significant AUC contributors were Oil & Gas $68.27 billion, Information Technology $64.64 billion, FMCG $33.68 billion, Automobiles $29.11 billion, Power $24.81 billion, Healthcare $24.73 billion and Consumer durables $18.21 billion. AUC depletion was prominent in financials, IT and metals. Oil was strong through the month, except towards the last week.
The only sector that held on to its AUC in June 2022 was automobiles.
To sum it up, there was no let-up in FPI selling in June 2022. The trend of FPI selling which started in October 2021 has been building up for 9 months now and FPIs have already sold equities worth $35 billion in this period. In the process, the FPI holdings in Indian stocks is also down by $144 billion in the last 9 months, one of the worst falls in FPI memory.
What were the sectors that FPIs bought into in June 2022
Data Source: NSDL
FPIs sold $6.4 billion in Indian equities in June 2022. Logically, selling sectors dominated. Out of the 23 sectors where FPI flows are tracked by NSDL, FPIs were net sellers in 21 sectors in June 2022. IPO market was quiescent in June 2022 with not a single IPO hitting the market. Normally, that provides some flow respite from FPIs.
There was only one sector where there was some decisive buying visible from FPIs. Capital goods sector saw inflows of $166 million and many foreign investors have been discovering pockets of value in the capital goods space for some time now. This reflects the perception that as a post-COVID recovery gathers steam, the first beneficiary would be the capital investment cycle. But, we have to wait and watch!
FPI selling was again relentless in June 2022
Like in the previous months, FPI selling was $1.74 billion in financials, which is hardly surprising. Financials have the highest weight in the indices and are the most widely owned. As the global economy faces tighter monetary conditions and higher bond yields, financials are likely to be worst hit in terms of loan offtake and investment valuations. Selling was also prominent in IT $791 million, consumer durables $666 million, metals & mining $511 million and Telecom $485 million.
Among other sectors that saw strong FPI outflows, oil & gas saw outflows of $463 million, power $345 million, automobiles $316 million and FMCG $310 million. In the last few months, we have seen one of the worst bouts of risk-off selling by the FPIs. The selling is not just in India but across Asian EMs. Across Taiwan, South Korea, India and Indonesia; the FPIs have sold close to $41 billion in the June 2022 quarter. As they say, amidst uncertainty, money still gravitates to the developed markets.
FPI flows into IPOs and secondary markets in 2022
|
Calendar Year 2021 |
FPI Flows - Secondary Markets |
FPI Flows - IPOs |
Overall FPI Flows |
Cumulative 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 |
| March 2022 | -5,244.75 | -140.19 | -5384.94 | -14,587.01 |
| April 2022 | -2,180.02 | -56.21 | -2,236.23 | -16,823.24 |
| May 2022 | -5,860.97 | +682.78 | -5,178.19 | -22,001.43 |
| June 2022 | -6,429.51 | -7.09 | -6,436.60 | -28,438.03 |
Data Source: NSDL (all figures in $ million)
If you look at the cumulative FPI flows till June 2022, outflows of $28.44 billion in the first 6 months of 2022 is accentuation of the FPI selling trend that started in October 2021. It has offset the overall inflows in 2021 by 7.56 times. The reason is that the secondary market selling in the first six months of 2022 has been four times the full year selling in 2021, but IPO flows in 2022 have just been a fraction of 2021. Therein lies the dichotomy.
The first half has been mixed for the IPO market with FPI interest limited in LIC IPO, although they did show interest in Delhivery IPO. In 2020, FPI flows returned with a bang after the pandemic. It remains to be seen if that kind of a bounce can be replicated in 2022 and 2023?
What FIIs bought and sold in India in September 2022?
- India Infoline News Service
- 10 Oct , 2022
- 6:25 AM
For the month of September 2022, the FPIs turned in a rather disappointing show. After infusing $634 million in July and $6.44 billion in August, FPIs were back to selling ways in September 2022. Remember, FPIs had sold equities worth $34 billion in India between October 2021 and June 2022. September was specifically disappointing as the entire selling by FPIs happened in the second half. In the first half of September 2022, FPIs were net buyers of $1.60 billion while they were net sellers of -$2.50 billion in the second half. For September 2022 as a whole, FPIs were net sellers in equities worth $894 million.
The impact of the market sell-off was also visible in the Assets under Custody (AUC) of the FPIs. The AUC of FPIs had fallen from $667 billion in October 2021 to $523 billion at the end of June 2022. In July 2022, the AUC had picked up to $569 billion and further to $601 billion in August 2022 on the back of aggressive FPI buying and buoyant markets. September 2022 was marked by a sharp FPI sell-off and index correction as FPI AUC fell back to $566 billion.
The month of September 2022 had just 2 IPOs of Harsha Engineers and Tamilnad Mercantile Bank, so even IPO support to FPI flows was limited. Here is the AUC standing, sector-wise.
Data Source: NSDL
Here is how the AUC mix looks like in September 2022
The table above captures the top 13 sectors with AUC more than $10 billion. NSDL has modulated the list from 40 sectors to 23 sectors. Out of these 23 sectors that FPIs invest in, AUC of the top-13 sectors accounted for 92.89% of total FPI AUC of $565.56 billion. The September 2022 AUC at $565.56 billion is down -5.95% compared to the August 2022 AUC. However, since the peak of October 2021, the FPI AUC is down -15.21%.
How does the sectoral mix of AUC stack up? Financials, comprising banks, NBFCs and insurance accounted for 31.64% of overall FPI AUC, corresponding to their weight in Nifty. The other significant AUC contributors were Oil & Gas $63.07 billion, Information Technology $58.34 billion, FMCG $39.63 billion, Automobiles $31.87 billion, Power $28.72 billion, Healthcare $27.67 billion and Consumer durables $21.74 billion. If you look at change in FPI exposure to sectors from the peak, the biggest depletion has happened in the IT sector followed by the banking and financial sector. IT sector alone accounted for more than 40% of the total FPI AUC depletion in India.
The immediate challenge to FPI flow sentiments would come from the non-inclusion of Indian debt paper in the global benchmark bond indices like JP Morgan and FT Russell. That rules out $40 billion of FPI debt flows into India.
FPIs and the sectoral buying story of September 2022
Data Source: NSDL
How were the FPI flows sector-wise in September 2022? Despite net selling of $894 million, there were enough sectors that saw net buying. Out of the 23 sectors where FPI flows are tracked by NSDL, FPIs were net sellers in 9 sectors in September 2022,neutral on 1 sector and buyers in 13 sectors. Clearly, selling has been concentrated in a handful of sectors only.
The buying was strongest in FMCG at $345 million and Telecom at $307 million. The reasons are not far to seek. Most FPIs are looking at telecom as a digital play on the limitless prospects of 5G. FMCG is not just defensive but is likely to gain the most by not passing on the fall in input costs to customers. Consumer services and capital goods saw buying of $301 million and $244 million respectively on major bets on infrastructure inputs. Other sectors that saw buying were healthcare, construction and auto.
FPI selling in September 2022 was focused on IT and commodities
The FPI selling story of September 2022 was concentrated on the IT sector and to lesser extent on oil & gas and metals. The IT sector saw net selling of $1,140 million. This was after concerns expressed over top line growth amidst falling IT spending. A series of IT downgrades combined with IT layoffs put off FPIs in a big way. While oil & gas saw selling of $542 million, it was $366 million for metals. Falling crude prices went against the upstream oil players. Downstream players are under pressure due to lower GRMs and negative marketing margins.
For metals, it is a double whammy with lower price realizations and rising cost of ores, coking coal, power and freight.
With RBI hiking rates by 50 bps and Fed by 75 bps, rate sensitives like banks, NBFCs and realty sold off. Power, cement and chemicals were the other sectors to witness selling in the month. FPIs are wary of globally vulnerable stories and prefer pure domestic plays.
FPI flows into IPOs and secondary markets in calendar 2022
Data Source: NSDL (all figures in $ million)
If you look at the cumulative FPI flows for the first 9 months of calendar 2022, the net outflows of $22.28 billion is still intimidating. The month of September was disappointing because the selling by the FPIs came after 2 consecutive months of net buying by FPIs and despite being decisive net buyers in the first half of September.
Going ahead, several factors would be an overhang on FPI flows. Firstly, there have been a series of downgrades of Indian equities after the market strength in 2022. Secondly, the Fed has hinted at another 75 bps rate hike in November and that should work against the globally impacted businesses. Thirdly, rupee is now at 82.40/$ and that would not give too much comfort to the FPIs. Last, but not the least, the Q2FY23 earnings season which has just started will be the real fundamental story that FPIs will focus on. FPI flows over the next few months would be interesting and critical!
The impact of the market sell-off was also visible in the Assets under Custody (AUC) of the FPIs. The AUC of FPIs had fallen from $667 billion in October 2021 to $523 billion at the end of June 2022. In July 2022, the AUC had picked up to $569 billion and further to $601 billion in August 2022 on the back of aggressive FPI buying and buoyant markets. September 2022 was marked by a sharp FPI sell-off and index correction as FPI AUC fell back to $566 billion.
The month of September 2022 had just 2 IPOs of Harsha Engineers and Tamilnad Mercantile Bank, so even IPO support to FPI flows was limited. Here is the AUC standing, sector-wise.
|
Industry Group |
Assets Under Custody (AUC) of FPIs - $ Billion (Sep 2022) |
| Financials | 178.94 |
| Oil & Gas | 63.07 |
| IT Services | 58.34 |
| FMCG | 39.63 |
| Automobiles | 31.87 |
| Power | 28.72 |
| Healthcare and Pharma | 27.67 |
| Consumer Durables | 21.74 |
| Metals & Mining | 18.03 |
| Telecom | 15.50 |
| Capital Goods | 14.64 |
| Consumer Services | 14.60 |
| Chemicals | 12.58 |
| Top 13 Sectors | 525.33 |
| Other 10 sectors | 40.23 |
| Total FPI AUC | 565.56 |
Here is how the AUC mix looks like in September 2022
The table above captures the top 13 sectors with AUC more than $10 billion. NSDL has modulated the list from 40 sectors to 23 sectors. Out of these 23 sectors that FPIs invest in, AUC of the top-13 sectors accounted for 92.89% of total FPI AUC of $565.56 billion. The September 2022 AUC at $565.56 billion is down -5.95% compared to the August 2022 AUC. However, since the peak of October 2021, the FPI AUC is down -15.21%.
How does the sectoral mix of AUC stack up? Financials, comprising banks, NBFCs and insurance accounted for 31.64% of overall FPI AUC, corresponding to their weight in Nifty. The other significant AUC contributors were Oil & Gas $63.07 billion, Information Technology $58.34 billion, FMCG $39.63 billion, Automobiles $31.87 billion, Power $28.72 billion, Healthcare $27.67 billion and Consumer durables $21.74 billion. If you look at change in FPI exposure to sectors from the peak, the biggest depletion has happened in the IT sector followed by the banking and financial sector. IT sector alone accounted for more than 40% of the total FPI AUC depletion in India.
The immediate challenge to FPI flow sentiments would come from the non-inclusion of Indian debt paper in the global benchmark bond indices like JP Morgan and FT Russell. That rules out $40 billion of FPI debt flows into India.
FPIs and the sectoral buying story of September 2022
Data Source: NSDLHow were the FPI flows sector-wise in September 2022? Despite net selling of $894 million, there were enough sectors that saw net buying. Out of the 23 sectors where FPI flows are tracked by NSDL, FPIs were net sellers in 9 sectors in September 2022,neutral on 1 sector and buyers in 13 sectors. Clearly, selling has been concentrated in a handful of sectors only.
The buying was strongest in FMCG at $345 million and Telecom at $307 million. The reasons are not far to seek. Most FPIs are looking at telecom as a digital play on the limitless prospects of 5G. FMCG is not just defensive but is likely to gain the most by not passing on the fall in input costs to customers. Consumer services and capital goods saw buying of $301 million and $244 million respectively on major bets on infrastructure inputs. Other sectors that saw buying were healthcare, construction and auto.
FPI selling in September 2022 was focused on IT and commodities
The FPI selling story of September 2022 was concentrated on the IT sector and to lesser extent on oil & gas and metals. The IT sector saw net selling of $1,140 million. This was after concerns expressed over top line growth amidst falling IT spending. A series of IT downgrades combined with IT layoffs put off FPIs in a big way. While oil & gas saw selling of $542 million, it was $366 million for metals. Falling crude prices went against the upstream oil players. Downstream players are under pressure due to lower GRMs and negative marketing margins.
For metals, it is a double whammy with lower price realizations and rising cost of ores, coking coal, power and freight.
With RBI hiking rates by 50 bps and Fed by 75 bps, rate sensitives like banks, NBFCs and realty sold off. Power, cement and chemicals were the other sectors to witness selling in the month. FPIs are wary of globally vulnerable stories and prefer pure domestic plays.
FPI flows into IPOs and secondary markets in calendar 2022
|
Calendar Year 2021 |
FPI Flows - Secondary Markets |
FPI Flows - IPOs |
Overall FPI Flows |
Cumulative 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 |
| March 2022 | -5,244.75 | -140.19 | -5384.94 | -14,587.01 |
| April 2022 | -2,180.02 | -56.21 | -2,236.23 | -16,823.24 |
| May 2022 | -5,860.97 | +682.78 | -5,178.19 | -22,001.43 |
| June 2022 | -6,429.51 | -7.09 | -6,436.60 | -28,438.03 |
| July 2022 | -4.58 | +622.63 | +618.05 | -27,819.98 |
| August 2022 | +5,949.25 | 492.70 | +6,441.95 | -21,377.05 |
| September 2022 | -904.25 | +1.17 | -903.08 | -22,280.13 |
If you look at the cumulative FPI flows for the first 9 months of calendar 2022, the net outflows of $22.28 billion is still intimidating. The month of September was disappointing because the selling by the FPIs came after 2 consecutive months of net buying by FPIs and despite being decisive net buyers in the first half of September.
Going ahead, several factors would be an overhang on FPI flows. Firstly, there have been a series of downgrades of Indian equities after the market strength in 2022. Secondly, the Fed has hinted at another 75 bps rate hike in November and that should work against the globally impacted businesses. Thirdly, rupee is now at 82.40/$ and that would not give too much comfort to the FPIs. Last, but not the least, the Q2FY23 earnings season which has just started will be the real fundamental story that FPIs will focus on. FPI flows over the next few months would be interesting and critical!
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