Weekly Musings – FPI flows for week ended December 20, 2024

23 Dec 2024 , 10:24 AM

FPI FLOWS SHOW YEAR-END INDIFFERENCE

It is said that stock market corrects less due to aggressive selling and more due to absence of buying. That was the case in the week to December 20, 2024 as the Sensex fell a whopping 4,092 points in a single week. This was the sharpest weekly fall in the Sensex in over 2 years and witnessed 3 days of over 1,000 points correction. FPI outflows were nothing alarming at $114 Million, but it was largely the absence of secondary market buying. That is not surprising as most of the domestic and global investors were focused on the IPO market, where most of the action was visible during the week.

MACRO FPI FLOW PICTURE UP TO DECEMBER 20, 2024

The table captures monthly FPI flows into equity and debt for the last 3 calendar year viz., 2022, 2023, and 2024.

Calendar Month	FPI Flows Secondary	FPI Flows Primary	FPI Flows Equity	FPI Flows Debt/Hybrid	Overall FPI Flows
Calendar 2022 (₹ Crore)	(146,048.38)	24,608.94	(121,439.44)	(11,375.78)	(132,815.22)
Calendar 2023 (₹ Crore)	1,27,759.75	43,347.14	1,71,106.89	65,954.38	2,37,061.27
Jan-2024 (₹ Crore)	(28,863.89)	3,120.34	(25,743.55)	19,150.21	(6,593.34)
Feb-2024 (₹ Crore)	(3,194.72)	4,733.60	1,538.88	30,277.95	31,816.83
Mar-2024 (₹ Crore)	29,152.54	5,945.78	35,098.32	16,987.88	51,996.20
Apr-2024 (₹ Crore)	(23,331.04)	14,659.77	(8,671.27)	(7,588.75)	(16,260.02)
May-2024 (₹ Crore)	(30,613.87)	5,027.54	(25,586.33)	12,675.47	(12,910.86)
Jun-2024 (₹ Crore)	24,345.55	2,218.99	26,564.54	15,192.90	41,757.44
Jul-2024 (₹ Crore)	26,059.05	6,305.79	32,364.84	16,431.20	48,796.04
Aug-2024 (₹ Crore)	(5,552.01)	12,872.13	7,320.12	18,173.17	25,493.29
Sep-2024 (₹ Crore)	46,552.40	11,171.24	57,723.64	35,813.99	93,537.63
Oct-2024 (₹ Crore)	(1,13,858.81)	19,841.86	(94,016.95)	(2,340.68)	(96,357.63)
Nov-2024 (₹ Crore)	(39,315.78)	17,703.98	(21,611.80)	167.80	(21,444.00)
Dec-2024 (₹ Crore) #	7,624.24	14,164.72	21,788.96	10,761.59	32,550.55
Total for 2024 (₹ Crore)	(1,10,996.34)	1,17,765.74	6,769.40	1,65,612.73	1,72,382.13
For 2024 ($ Million)	(13,176.05)	14,044.24	868.19	19,845.33	20,713.52
# – Recent Data is up to December 20, 2024

Data Source: NSDL (Negative figures in brackets)

With the year 2024 almost ending, it looks like we may end up with neutral FPI flows into equities, offset by substantial inflows into debt. Out of the total net FPI flows of ₹1,724 Billion in calendar 2024, FPI infusion in debt was ₹1,656 Billion, while equities saw FPI inflows of just ₹68 Billion. The net FPI inflow of $20.71 Billion in 2024 comprises of FPI inflows into debt of $19.84 Billion and $0.87 Billion of net FPI inflows into equities. If you look at the break-up of this $0.87 Billion equity inflows in 2024, secondary market equities saw net selling of $(13.18) Billion, while IPOs saw FPI infusion of $14.04 Billion.

FPI SENTIMENTS – THE WEEK THAT WAS

For the week to December 20, 2024, FPIs remained modest net sellers to the tune  of $114 million, lower than $199 million selling in previous week Here is the week that was.

• US Fed policy statement cut rates by another 25 bps, taking the total rate cuts to 100 bps in 2024. However, considering the robust GDP growth and the last mile inflation worries, the Fed has guided for just 2 cuts of 25 bps each in the year 2025.
• RBI published the MPC minutes of the December monetary policy meeting on Friday. The undertone was clear that the MPC members only expect the food inflation to taper by last quarter of FY25. That makes even Feb-25 rate cuts slightly doubtful.
• The US Bureau of Economic Analysis announced final Q3 GDP at 3.1%, which is 30 bps above the first two estimates. However, the PCE inflation for November also edged higher to 2.4%, making a case for the Federal Reserve slowing on rate cuts in 2025.
• The rupee weakened beyond ₹85/$ this week and even touched a low of ₹85.11/$ on the back of the bond spreads between India and the US narrowing to a 2-year low of just 224 basis points. Weakening of the Yuan also tended to weaken the rupee.
• Withdrawal of India’s Most Favoured nation (MFN) status by Switzerland is likely to add to the tax payable by Indian companies operating in the US. It could also impact FPI flows as Swiss FPIs will have to pay higher tax on India dividends at 10% instead of 5%.
• The merchandise trade deficit for the Indian economy for November 2024 touched a record level of $37.84 Billion, nearly 20% higher than the previous record. This does raise concerns about the current account deficit (CAD) for Q2 and Q3 of FY25.

DAILY FPI EQUITY FLOWS FOR LAST 4 ROLLING WEEKS

Here is the last 4 rolling weeks data on FPI flows as it shows us a time series moving average of FPI flows.

Date	FPI Flow (₹ Crore)	Cumulative flows	FPI Flow($ Million)	Cumulative flows
25-Nov-24	1,072.97	1,072.97	126.98	126.98
26-Nov-24	9,615.79	10,688.76	1,140.97	1,267.95
27-Nov-24	3,814.53	14,503.29	452.58	1,720.53
28-Nov-24	-1,048.89	13,454.40	-124.17	1,596.36
29-Nov-24	-8,532.90	4,921.50	-1,009.91	586.45
02-Dec-24	-990.32	3,931.18	-117.21	469.24
03-Dec-24	3,793.55	7,724.73	447.98	917.22
04-Dec-24	9,297.53	17,022.26	1,097.12	2,014.34
05-Dec-24	2,863.58	19,885.84	338.13	2,352.47
06-Dec-24	9,489.29	29,375.13	1,119.90	3,472.37
09-Dec-24	-786.13	28,589.00	-92.86	3,379.51
10-Dec-24	599.78	29,188.78	70.79	3,450.30
11-Dec-24	1,867.12	31,055.90	220.04	3,670.34
12-Dec-24	194.75	31,250.65	22.96	3,693.30
13-Dec-24	-3,563.53	27,687.12	-419.87	3,273.43
16-Dec-24	2,936.51	30,623.63	346.12	3,619.55
17-Dec-24	189.10	30,812.73	22.29	3,641.84
18-Dec-24	-2,386.74	28,425.99	-281.03	3,360.81
19-Dec-24	-922.34	27,503.65	-108.59	3,252.22
20-Dec-24	-793.19	26,710.46	-93.23	3,158.99

Data Source: NSDL

• In previous 7 rolling weeks, FPIs saw net outflows of $(199) Million; net inflows of $2,886 Million, $587 Million; net outflows of $(388) Million, $(288) Million, $(2,375) Million, and $(979) Million. In the week to December 20, 2024 net FPI equity outflows were to the tune of $(114) Million; more a signal of year-end indifference.
• If you look at the last 4 rolling weeks on a cumulative basis, total net FPI inflows into equities were to the tune ₹26,710 Crore or $3,159 Million; with the broad trend mixed.

The only big data points that now remain are the current account deficit (CAD) for Q2FY25 and the new year allocation of FPIs.