Here is a look at how Assets Under Custody (AUC) of FPIs stands at the close of Sep-21.
We have covered the top 15 sectors where AUC is above $10 billion. Out of a total of 40 sectors that FPIs invest in, AUC of these 15 sectors accounts for 89% of the total AUC of $667 billion. Banks dominate, and that is hardly surprising. However, financials inclusive of banks, NBFCs and insurance account for 33.7% of total FPI AUC.
The other significant AUC components are IT at $95 billion, Oil & Gas at $68 billion and FMCG at $42 billion. Healthcare and autos also made significant contributions to the AUC. The AUC pattern approximately corresponds to the Nifty weights, which is understandable. Between Jul-21 and Sep-21, the FPI AUC has grown from $595 billion to $667 billion, signifying FPI wealth accretion of 12.1% in two months.
What sectors did FPIs buy into in Sep-21
FPIs infused $1.74 billion into Indian equities in September, but specific sectors exhibited diverse trends. Let us start off with the sectors that saw positive net FPI flows in Sep-21. Unlike Aug-21, when chunk of the FPI flows came in through IPOs, the flows in September were largely secondary market flows. We will come back to this point later. Here is a quick pictorial summary of sectoral flows in Sep-21.
With net FPI flows of $1.74 billion in Sep-21, there were significant contributions from some sectors. The biggest contributor was telecom sector that saw net FPI inflows of $910 million in Sep-21. Most of the flows were into Bharti Airtel, which attracted global investor interest ahead of the proposed Rs21,000cr rights issue. Oil & Gas saw robust FPI flows of $309 million. RIL led from the front but FPIs also picked up stake in PSU oil and gas names as Brent got closer to $80/bbl and government hiked gas prices by 62% to $2.90 per MMBtu.
Among the other sectors that saw significant inflows, NBFCs saw inflows of $296 million while consumer durables saw net inflows of $291 million. Consumer durables saw defensive buying in the face of market uncertainty. The logic of safe haven buying also extended to FMCG and pharma companies. FMCG saw net inflows of $212 million and healthcare got $175 million. With construction and infrastructure activity in full swing, the FPIs were also enthusiastic about cement and capital goods, a capital cycle revival bet.
Sectors that FPIs sold into in Sep-21
In September 2021, inflows from FPIs certainly dominated outflows. However, some sectors saw significant outflows too. The IT sector saw outflows of $502 million in Sep-21. The profit booking was largely synchronized with the technology selling in NASDAQ and other markets. FPIs have held through a huge rally in IT and were taking some profits off the table.
HDFC AMC saw big selling but that was largely block selling by Standard Life. Among other sectors seeing selling pressure, FPIs exited airlines as the sector continued to bleed. Surprisingly, FPIs did not share the enthusiasm for financials for banks as they sold out of a number of banks on asset quality concerns.
IPO versus Secondary Market flows of FPIs in CY 2021
FPI Flows -
FPI Flows -
There may be minor differences between the data here and the sectoral data but that is more due to small adjustments made. The stark difference you can see between August and September is the huge role played by secondary market flows in Sep-21 as compared to the dominant role of IPO flows in Aug-21.
Let us look at the cumulative flows of FPIs into Indian equities in the first 9 months of 2021. FPIs infused $8.88 billion into equities in the first 9 months of calendar year 2021. However, out of this figure, $5.15 billion has come through IPOs and 3.73 billion came in as net inflows into secondary markets.
In the midst of all these niceties, FPIs have seen their equity wealth grow 12.1% in the last 2 months to $667 billion and are certainly laughing all the way to the bank.