What FIIs bought and sold in India in March 2022?

FPIs sold $5.38 billion in Indian equities in Mar-22. This takes the total FPI selling in last 3 months to $14.50 billion and over $20 billion in the last 6 months. Obviously, sectors witnessing buying would be limited, but there were still some sectors that got the FPIs interested during March 2022.

April 07, 2022 9:32 IST | India Infoline News Service
If Feb-22 was the month of worsening geopolitics, March showed accentuation of that trend. It was not just the ongoing war between Russia and Ukraine, but also the possible side effects of sanctions on Russia. Obviously Russia is not sitting quiet and they have complicated global equations by pegging the Rouble to the dollar; forcing buyers of crude oil and gas to either pay in Rouble or in gold.

Amidst this chaos, the US Fed raised Fed rates by 25 bps in March with a promise to raise rates in each of the remaining 6 FOMC meetings in 2022. FPIs were also intimidated by the fact that the US planned to seriously start unwinding its $9 trillion bond book from May-22.

In these conditions, aggressive FPI selling was inevitable. In Jan-22, FPIs sold $4.46 billion of equities and $4.71 billion in Feb-22. In Mar-22, FPIs sold another $5.38 billion of equities. FPIs have already sold over $14.50 billion in Indian equities in first 3 months of 2022. In Mar-22, entire selling by FPIs happened in the first half, with token buying seen in second half.

That is hardly surprising because towards the end of the fiscal year; domestic investors and FPIs protect portfolio values by avoiding aggressive selling on index heavyweights. In Mar-22, the FPIs sold $5.43 billion in the first half, but bought equities in second half of Mar-22. Here is the breakup of Assets Under Custody (AUC) of FPIs at the close of Mar-22.
Assets Under Custody (AUC)
of FPIs - $ Billion (Mar-22)
Banks 105.20
IT Services 91.00
NBFCs 75.08
Oil & Gas 70.33
FMCG 34.41
Pharma & Health 28.91
Utilities 27.48
Automobiles 24.17
Capital Goods 18.77
Metals & Mining 16.73
Consumer Durables 16.45
Telecom 15.59
Insurance 12.73
Chemicals 11.44
Retailing 10.63
Cement 10.04
Other 24 Industry Groups 49.78
Total AUC 618.74
 Data Source: NSDL

How FPI AUC sectoral mix changed in Mar-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 91.95% of the total FPI AUC of $618.74 billion. The Mar-22 AUC at $618.74 billion is up 2.54% over Feb-22 AUC and this was largely driven by IT, metals and oil & gas sectors.

Financials, comprising banks, NBFCs and insurance accounted for 31.19% of FPI AUC, which approximately corresponds to the weightage of financials in the Nifty index. The other significant AUC contributors are IT at $91 billion, Oil & Gas $70.33 billion, FMCG $34.41 billion, Healthcare $28.91 billion, utilities $27.48 billion and automobiles $24.17 billion. The AUC depletion was most prominent in banks and to a lesser extent in automobiles.

Unlike the previous two months, IT did not come under as much pressure. As a result IT managed to improve its AUC during the month. Even oil & gas saw accretion in AUC during the month as heavyweights like ONGC and Reliance added heft in the second half of the month. Of course, banks saw depletion of AUC but that is hardly surprising considering the aggressive selling by the FPIs and the hawkish sentiments of the US Federal Reserve. Among the smaller sectors, metals and utilities saw an expansion in AUC and better AUC rankings.

Sectors where FPIs bought into in Mar-22

FPIs sold $5.38 billion in Indian equities in Mar-22. This takes the total FPI selling in last 3 months to $14.50 billion and over $20 billion in the last 6 months. Obviously, sectors witnessing buying would be limited, but there were still some sectors that got the FPIs interested during March 2022.

Data Source: NSDL
With strong numbers and robust prices on the London Metals Exchange (LME), metals were once again the star pick of the month. Metals witnessed FPI inflows of $575 million amidst an extremely weak market. However, metals were not alone. Two more sectors witnessed robust inflows. Chemicals saw $194 million of FPI buying while oil & gas sector also saw $112 million of FPI buying. In the case of FMCG, the net figure is misleading as it saw aggressive buying in food and beverage companies but saw selling in other FMCG products.

What are the sectors that FPI sold into in Mar-22?

Unlike the last 2 months, the selling was not dominated by IT but by the financials. FPIs sold $2,127 million worth of banking shares in Mar-22 and $1,011 million of NBFC stocks taking the total selling in the financial sector to a whopping $3.14 billion. Financials came under pressure due to fears of a hawkish stance by the US Fed.

Automobiles saw FPI outflows of $846 million and cement saw FPI outflows of $543 million in Mar-22. Auto outflows were on the back of input cost worries and Fed hawkishness while cement bore the brunt of higher power and fuel costs. With worsening geopolitics, the operating risk is likely to increase which saw outflows of $327million from insurance stocks. In addition, capital goods and consumer durables saw aggressive FPI selling in the month of Mar-22. Retailing and IT also witnessed selling pressure in Mar-22 but the pressure on IT sector was nowhere close what we had seen in Jan-22 and Feb-22.

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
March 2022 -5244.75 -140.19 -5384.94 -14,587.01
Data Source: NSDL (all figures in $ million)

If you look at the cumulative FPI flows till Mar-22, outflows of $14.59 billion in the first 3 months of 2022 offset the overall inflows in 2021 more than 4 times 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, post the LIC IPO. A lot of the improvement from here will depend on the LIC IPO, which should most likely happen by mid-May 2022.

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