What FIIs bought and sold in India in October 2021?

Foreign Portfolio Investors sold heavily in Oct-21. The month of Sep-21 had seen inflows of $1.74 billion into equities but FPIs sold a huge $1.81 billion in October due to factors like input cost inflation, likely Fed taper etc.

Nov 04, 2021 03:11 IST India Infoline News Service

Foreign Portfolio Investors sold heavily in Oct-21. The month of Sep-21 had seen inflows of $1.74 billion into equities but FPIs sold a huge $1.81 billion in October due to factors like input cost inflation, likely Fed taper etc. This was topped by a series of brokerage downgrades of Indian equities by the likes of UBS, Nomura and Morgan Stanley. FPIs were largely neutral in the first half of Oct-21 but in the second half, the spate of brokerage downgrades resulted in FPIs selling equities worth $1.84 billion.

Here is a look at how the equity Assets Under Custody (AUC) of the foreign portfolio investors (FPIs) stands at the close of Oct-21.

Data Source: NSDL

The chart covers the top 16 sectors where AUC is above $10 billion. Out of 40 sectors that FPIs invest in, AUC of these 16 sectors account for 92.12% of the total AUC of $660 billion. On a sequential basis, the AUM was lower by $7 billion on account of the sharp sell-off in the equity markets as well as price damage to stocks.

Banks dominate the AUC rankings, and that is hardly surprising. However, financials inclusive of banks, NBFCs and insurance account for 34.6% of total FPI AUC. The other significant AUC components are IT at $89.5 billion, Oil & Gas at $67.5 billion and FMCG at $39.5 billion. Healthcare and autos also made significant contributions to the AUC.

IT sector value saw a sharp fall of nearly $6 billion in the month. The two sectors to move up the market cap rankings were utilities and telecom. Of course, utilities were largely driven by positive moves in NTPC and Tata Power while the rally in Bharti Airtel led telecom higher. In Oct-21, the AUC was down from $667 billion to $660 billion on the back of selling.

What sectors did FPIs buy into in Oct-21

FPIs withdraw $1.81 billion from Indian equities in Oct-21, in contrast to their buying trend in September. Here is a pictorial summary of sectoral flows in Oct-21.

Data Source: NSDL

With net FPI outflows of $1.81 billion in Oct-21, outflows were bound to be more significant. However, there were some sectoral inflows too. Utilities attracted inflows of $271 million, largely driven by buying interest in NTPC and Tata Power.

Capital Goods saw buying to the tune of $258 million focussed on Larsen & Toubro, which has been in the midst of a structural rally. Telecom also attracted inflows of $136 million led by Bharti Airtel and its proposed rights issue. Two more sectors that witnessed inflows to a smaller extent were oil & gas and banking.

Sectors that FPIs sold into in Oct-21

The selling in Oct-21 was dominated by Information Technology. Despite good results, FPIs saw pressure on OPMs and a spurt in attrition rates. This resulted in a massive sell-off to the tune of $1.44 billion as FPIs sold into most frontline IT stocks. Cement companies saw selling to the tune of $594 million on fears of a spike in input costs and power costs.

Among other major sectors to sell-off, financials saw selling of $278 million on asset quality pressures while FMCG saw selling of $241 million after Q2 results hinted at fall in profits due to input cost pressures. There was $135 million selling in media sector; largely in Zee after the ongoing imbroglio between Subhash Chandra family and largest investor, Invesco Fund.

In addition, other sectors that witnessed selling during the month of Oct-21 include retail, realty, consumer durables and transportation. Input cost inflation was a major concern.

IPO versus Secondary Market flows of FPIs in CY 2021

Calendar Year
2021
FPI Flows -
Secondary Markets
FPI Flows -
IPOs
Overall
FPI Flows
Cumulative
FPI Flows
Jan-21 2,731.61 -73.49 2,658.12 2,658.12
Feb-21 2,958.68 580.15 3,538.83 6,196.95
Mar-21 491.62 952.58 1,444.20 7,641.15
Apr-21 -1,302.57 8.65 -1,293.92 6,347.23
May-21 -932.25 543.52 -388.73 5,958.50
Jun-21 1,327.39 1,033.32 2,360.71 8,319.21
Jul-21 -2,342.77 829.97 -1,512.80 6,806.41
Aug-21 -817.98 1,102.00 284.02 7,090.43
Sep-21 1.616.51 175.70 1,792.21 8,882.64
Oct-21 -1,931.62 124.24 -1807.38 7,075.26
Data Source: NSDL (all figures in $ million)

While IPOs played a major role in FPI inflows in the months of March, June and August, the contribution of IPOs has been more subdued in Sep-21 and Oct-21. Just as secondary market buying dominated FPI flows in Sep-21, FPI selling in secondary markets dominated FPI action in Oct-21.

Let us look at the cumulative flows of FPIs into Indian equities in the first 10 months of calendar year 2021. FPIs infused $7.08 billion into equities in the first 10 months of calendar year 2021. However, out of this figure, $5.27 billion has come through IPOs and 1.81 billion came in as net inflows into secondary markets in the first 10 months of the year. What would, perhaps, enthuse FPIs is that since the last Samvat, markets are up 40% yoy and that is a lot of wealth created in Indian equities.

Related Story

Open Free Demat Account (Rs699)
Open ZERO Brokerage Demat Account

  • 0

    Delivery Brokerage for Lifetime

  • 20

    Per order for Intraday, F&O, Currency & Commodity