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.
Industry Group |
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 |
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.
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.
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 | -5244.75 | -140.19 | -5384.94 | -14,587.01 |
Data Source: NSDL (all figures in $ million)
Related Tags
Invest wise with Expert advice
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Capital Services Support WhatsApp Number
+91 9892691696
IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
ARN NO : 47791 (AMFI Registered Mutual Fund Distributor)
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.