What FIIs bought and sold in India in May 2022?

FPI selling in May 2022 was fairly high and there was selling on a consistent basis.

June 06, 2022 2:08 IST | India Infoline News Service
There was some hope that the month of May 2022 could see FPI selling abating. However, with the global uncertainty over rate action and valuation concerns, FPIs continued to sell aggressively in May 2022. In a sense, the May selling could have been a lot worse had it not been for the IPO flows into the LIC and Delhivery IPOs.

FPI selling in May 2022 was fairly high and there was selling on a consistent basis. Look at the FPI equity numbers in the last 5 months. In January 2022, FPIs sold $4.46 billion of equities and sold another $4.71 billion in February 2022. In March 2022, FPIs sold $5.38 billion in equities, while April 2022 saw relatively subdued FPI selling at $2.36 billion. However, net selling in equities in May 2022 was again elevated at $5.16 billion. FPIs have sold over $22 billion in Indian equities in the first five months of 2022.

In May 2022 there were 2 IPOs viz. LIC and Delhivery, which saw substantial buying interest from the FPIs. Despite that, the net selling by FPIs was $3.26 billion in the first fortnight and $1.90 billion in the second fortnight of the month. Unlike in April, there was no let-up in FPI selling and the pressure was consistent through the month.

Assets Under Custody (AUC)
of FPIs - $ Billion (May 2022)
Financials 179.52
Oil & Gas 71.58
IT Services 70.18
FMCG 35.81
Automobiles 29.46
Pharma and Healthcare 26.55
Power 25.73
Consumer Durables 20.68
Metals & Mining 17.26
Telecom 14.00
Consumer Services 13.19
Chemicals 12.58
Capital Goods 12.17
Top 13 Sectors 528.72
Other 10 sectors 39.37
Total FPI AUC 568.09
Data Source: NSDL
How does the AUC mix look in May 2022

The table captures the top 13 sectors with AUC more than $10 billion. NSDL has modulated the list from 40 sectors to 23 sectors. Out of these 23 sectors that FPIs invest in, AUC of the top-13 sectors accounted for 93.07% of total FPI AUC of $568.09 billion. The Apr-22 AUC at 568.09 billion is down -6.74% over April 2022 AUC. This was due to heavy selling in IT sector and financials as well as a sharp fall in indices.

How does the sector mix of AUC stack up? Financials, comprising banks, NBFCs and insurance accounted for 31.6% of overall FPI AUC, which corresponds to the weight of financials in the Nifty index. The other significant AUC contributors were Oil & Gas at $71.58 billion, Information Technology at $70.18 billion, FMCG $35.81 billion, Automobiles at $29.46 billion, Healthcare $26.55 billion, Power $25.73 billion and Consumer durables $20.68 billion. AUC depletion was most prominent in financials and IT, while Reliance helped the AUC rank of oil and gas sector scale higher.

To summarize. there was virtually no let-up in selling in May 2022. The trend of FPI selling which started in October 2021 has been consistent for 8 months now and FPIs have already sold equities worth $29 billion in this period. The first five months of calendar year 2022 itself has seen over $23 billion of equity selling by the FPIs.

What were the sectors that FPIs bought into in May 2022

Data Source: NSDL

FPIs sold $5.16 billion in Indian equities in May 2022. Obviously, the selling sectors would dominate but a few sectors that did see buying in the month of May 2022. The services sector, led by retail and digital services, saw buying worth $342 million  in the month of Mary 2022. However, that was largely on account of the IPO of Delhivery that attracted a lot of FPI buying interest; both as anchors and later as IPO investors.

There was also buying in digital names as global investors looked to take advantage of the sharp fall in prices in these counters. The other sector to see FPI buying in May 2022 was the power sector, which saw buying of $298 million. Power sector saw defensive buying in renewables and a preference for dividend yield. Chemicals saw limited buying of $67 million, but otherwise it was selling the way.

Big story was about sectoral FPI selling in May 2022

The big selling was once again in the IT and the financials in May 2022. FPI sold $2,081 million of IT shares and $1,551 million of financials including banks, NBFCs and insurers. This is net of any inflows into the LIC IPO. Financials have been under pressure after the hawkish signals from the Fed and the RBI following suit. FPIs are cautious about financials over cost of funds and bond portfolios. IT got a thumbs down for another month with fears of a recession in the US and the risk of a slowdown in tech spending.

Among other sectors that saw strong outflows, oil & gas saw FPI outflows of $461 million and metals saw outflows of $354 million in May 2022. FPIs were wary of upstream oil on windfall tax concerns while downstream margins are under strain. Metals have seen rapid global unwinding as China showed signals of slowdown. The other big sells were consumer durables at $349 million, consumer services $222 million, cement $187 million, automobiles $180 billion and construction $152 million in May 2022. Most were part of the routine sell-off amidst fears of supply chain bottlenecks and weak demand.

FPI flows into IPOs and secondary markets in calendar 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 -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
Data Source: NSDL (all figures in $ million)

If you look at the cumulative FPI flows till May 2022, outflows of $22 billion in the first 5 months of 2022 is accentuation of the FPI selling trend that started in October 2021. It has offset the overall inflows in 2021 by 5.85 times. Also, the aggressive buying in IPOs by the FPIs appears to be missing in calendar year 2022.

The IPO market for the big capital raising league was mixed in 2022. Delhivery saw a good listing, despite a tepid response. However, LIC is way below the IPO price. There are a slew of IPOs with approvals on hand, waiting to launch their IPOs. A clearer picture of FPI appetite for IPOs should emerge in the coming few months.

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