What FIIs bought and sold in India in October 2022?

The month of October 2022 was similar to the month of September 2022 in terms of FPI flows.

November 09, 2022 9:26 IST | India Infoline News Service
In September, FPIs were net buyers in the first half of the month, but sold heavily in the last week, ending up net sellers. In October 2022, FPIs were net buyers in the first half, but sold an equal amount in the second half to end the month on a neutral note. Just look at the numbers. In September 2022, FPIs infused $1.60 billion in the first 3 weeks, but sold $2.50 billion of equities in the last week to end with net FPI selling of $900 million.

The month of September 2022 was disappointing, especially coming in the aftermath of the stellar inflows in August. FPIs had infused $634 million in July and a whopping $6.44 billion in August 2022. That was a welcome relief after FPIs had withdrawn $34 billion from Indian equities between October 2021 and June 2022. In that context, September disappointed. How about October 2022? During the month, the FPIs were net buyers of equities worth $905 million in the first half of the month and sold equities worth $904 million in the second half. The month ended neutral in terms of FPI flows as global central bank hawkishness continued to bother the foreign portfolio investors.

Picture of AUC mix as of October 2022

The impact of the market sell-off was also visible in the Assets under Custody (AUC) of the FPIs. However, this has been more than offset by the value advantage emanating from a positive Nifty performance. The AUC of FPIs had peaked at $667 billion in October 2021 and from there it had fallen by -21.6% to $523 billion by the end of June 2022. Subsequently, in July 2022, AUC picked up to $569 billion and to $601 billion in August 2022. While the AUC tapered to $566 billion in the month of September, it has again bounced back to $582 billion in October
2022, on the back of a positive Nifty performance.

Here is the AUC standing, sector-wise as of the close of October 2022.

Assets Under Custody (AUC)
of FPIs - $ Billion (Oct 2022)
Financials 186.19
Oil & Gas 66.50
IT Services 61.72
FMCG 38.57
Automobiles 33.12
Healthcare and Pharma 29.18
Power 28.88
Consumer Durables 20.84
Metals & Mining 17.83
Telecom 15.90
Capital Goods 15.23
Consumer Services 14.58
Chemicals 12.68
Top 13 Sectors 541.18
Other 10 sectors 41.11
Total FPI AUC 582.29
Data Source: NSDL

The table above captures the top 13 sectors with AUC above $10 billion. NSDL has already modulated the list from 40 sectors to 23 sectors. Out of these 23 sectors that FPIs invested in, AUC of the top-13 sectors accounted for 92.94% of total FPI AUC of $582.29 billion. The October 2022 AUC at $582.29 billion is up +2.96% compared to the September 2022 AUC. However, compared to the peak of October 2021, the FPI AUC is down -12.7%.

Financials, comprising banks, NBFCs and insurance accounted for 31.98% of overall FPI AUC, roughly corresponding to their weight in Nifty. The other significant AUC contributors were Oil & Gas $66.50 billion, Information Technology $61.72 billion, FMCG $38.57 billion, Automobiles $33.12 billion, Healthcare $29.18 billion, Power $28.88 billion and Consumer durables $20.84 billion. Thematically, financials, rate sensitive and auto sector gained AUC this month while consumer durables and FMCG saw depletion in AUC.

FPI flows in October 2022: How it panned out sector-wise

Data Source: NSDL

How were the FPI flows sector-wise in October 2022? It was a neutral month with $905 million of buying in the first half of the month and $904 million of selling in the second half of the month. Out of the 23 sectors where FPI flows are tracked by NSDL, FPIs were net sellers in 8 sectors in October 2022,neutral on 1 sector and buyers in 14 sectors.

The buying was strongest in construction at $157 million and Power at $118 million. The reasons are not far to seek. Most FPIs are looking at construction as a play on the economic recovery and power more for the renewable component than traditional thermal. Value diversion has been happening accordingly. Interestingly, IT and Healthcare saw buying to the tune of $115 million and $113 million respectively while capital goods also saw buying to the tune of $101 million. Auto and telecom were 2 other sectors that saw buying.

FPI selling in October 2022 was focused on banking and oil

The FPI selling story of October 2022 was concentrated on the banking and financial sector, which saw selling of $568 million as FPIs used higher levels to book profits and pare positions in private banks. Among others, oil & gas space saw selling of $172 million, largely driven  by selling in OMCs amidst concerns over mounting while realty stocks sold off $102 million on rate hike concerns. FMCG also sold off as the pressure of rising input costs and falling rural sales has put most of the FMCG companies in a rather tight spot, especially select FMCG stocks with a strong rural franchise. Most of the selling was concentrated in the second half of the month of October 2022.

Early trends from November 2022 indicate that FPIs are back on the buying side on the hope that the pace of rate hikes by the Fed should slow from here on. That is what the Fed statement has hinted at. Additionally, IPOs are back with a bang in November with nearly a dozen IPOs raising funds in the market in the first half of November. That is likely to change the face of FPI flows in the month of November 2022.

FPI flows into IPOs and secondary markets in calendar 2022

Calendar Year
2021 and 2022
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 -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
October 2022 -99.30 +98.78 -0.52 -22,280.65
Data Source: NSDL (all figures in $ million)

If you look at the cumulative FPI flows for the first 10 months of calendar 2022, the net outflows of $22.28 billion is still intimidating. The month of October 2022 was absolutely neutral with positive FPI flows into IPOs while secondary markets sold off. The cumulative outflows in 2022 are sharply down from the peak levels of June 2022, but it looks like we could still end 2022 with a big dose of net FPI selling.

November 2022 could see FPI flows positively impacted by a more risk-on approach by the global investors, greater confidence on rate hikes peak out as well as a relatively stable to strong rupee. IPOs are likely to give the added boost. Q2FY23 results have been mixed with flattering top line but rather disappointing bottom line growth. Profits have been under pressure due to higher manufacturing costs and higher interest costs. November flows could actually set the trend for FPI flows in the coming months.

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