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What FIIs bought and sold in India in June 2022?

6 Jul 2022 , 09:21 AM

Let us first put things in perspective. In October 2021, when the Sensex was at the peak, the total assets under custody (AUC) of the FPIs stood at $667 billion. A full 9 months later, the FPI AUC stands at $523 billion. That is a fall of $144 billion in last 9 months or -21.6%. While $35 billion of funds went out of India, the balance $109 billion is value depletion. This has been one of the sharpest 9-month fall in FPI AUC since FPIs started investing in India in 1993.

Now, back to brass tacks. June 2022, not only sustained the FPI selling momentum but saw a sharpening of the intensity. Look at the FPI equity numbers in last 6 months. In January 2022, FPIs sold $4.46 billion of equities and another $4.71 billion in February 2022. In March 2022, FPIs sold $5.38 billion, while April 2022 saw subdued FPI selling at $2.36 billion. Net selling in equities was elevated at $5.16 billion in May 2022 and $6.39 billion in June 2022. FPIs have now sold over $29 billion in Indian equities in the first six months of 2022.

In June 2022 there was a virtual drought of IPOs. FPIs sold equal amounts of $3.2 billion in the first half and the second half of June 2022.

Here is the AUC standing, sector-wise.

Assets Under Custody (AUC)
of FPIs – $ Billion (Jun 2022)
Financials 162.77
Oil & Gas 68.27
IT Services 64.64
FMCG 33.68
Automobiles 29.11
Power 24.81
Healthcare and Pharma 24.73
Consumer Durables 18.21
Metals & Mining 14.56
Telecom 13.01
Capital Goods 11.75
Consumer Services 11.52
Chemicals 11.07
Top 13 Sectors 488.11
Other 10 sectors 35.31
Total FPI AUC 523.42

Data Source: NSDL
Quick look at the AUC mix in June 2022

The table above 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 93.25% of total FPI AUC of $523.42 billion. The June 2022 AUC at $523.42 billion is down -7.86% over May 2022 AUC. Since the peak of October 2021, FPI AUC is down -21.4%.

How does the sector mix of AUC stack up? Financials, comprising banks, NBFCs and insurance accounted for 31.1% of overall FPI AUC, which is the approximate Nifty weight too. The other significant AUC contributors were Oil & Gas $68.27 billion, Information Technology $64.64 billion, FMCG $33.68 billion, Automobiles $29.11 billion, Power $24.81 billion, Healthcare $24.73 billion and Consumer durables $18.21 billion. AUC depletion was prominent in financials, IT and metals. Oil was strong through the month, except towards the last week.
The only sector that held on to its AUC in June 2022 was automobiles.

To sum it up, there was no let-up in FPI selling in June 2022. The trend of FPI selling which started in October 2021 has been building up for 9 months now and FPIs have already sold equities worth $35 billion in this period. In the process, the FPI holdings in Indian stocks is also down by $144 billion in the last 9 months, one of the worst falls in FPI memory.

What were the sectors that FPIs bought into in June 2022

Data Source: NSDL

FPIs sold $6.4 billion in Indian equities in June 2022. Logically, selling sectors dominated. Out of the 23 sectors where FPI flows are tracked by NSDL, FPIs were net sellers in 21 sectors in June 2022. IPO market was quiescent in June 2022 with not a single IPO hitting the market. Normally, that provides some flow respite from FPIs.

There was only one sector where there was some decisive buying visible from FPIs. Capital goods sector saw inflows of $166 million and many foreign investors have been discovering pockets of value in the capital goods space for some time now. This reflects the perception that as a post-COVID recovery gathers steam, the first beneficiary would be the capital investment cycle. But, we have to wait and watch!

FPI selling was again relentless in June 2022

Like in the previous months, FPI selling was $1.74 billion in financials, which is hardly surprising. Financials have the highest weight in the indices and are the most widely owned. As the global economy faces tighter monetary conditions and higher bond yields, financials are likely to be worst hit in terms of loan offtake and investment valuations. Selling was also prominent in IT $791 million, consumer durables $666 million, metals & mining $511 million and Telecom $485 million.

Among other sectors that saw strong FPI outflows, oil & gas saw outflows of $463 million, power $345 million, automobiles $316 million and FMCG $310 million. In the last few months, we have seen one of the worst bouts of risk-off selling by the FPIs. The selling is not just in India but across Asian EMs. Across Taiwan, South Korea, India and Indonesia; the FPIs have sold close to $41 billion in the June 2022 quarter. As they say, amidst uncertainty, money still gravitates to the developed markets.

FPI flows into IPOs and secondary markets in 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
June 2022 -6,429.51 -7.09 -6,436.60 -28,438.03

Data Source: NSDL (all figures in $ million)

If you look at the cumulative FPI flows till June 2022, outflows of $28.44 billion in the first 6 months of 2022 is accentuation of the FPI selling trend that started in October 2021. It has offset the overall inflows in 2021 by 7.56 times. The reason is that the secondary market selling in the first six months of 2022 has been four times the full year selling in 2021, but IPO flows in 2022 have just been a fraction of 2021. Therein lies the dichotomy.

The first half has been mixed for the IPO market with FPI interest limited in LIC IPO, although they did show interest in Delhivery IPO. In 2020, FPI flows returned with a bang after the pandemic. It remains to be seen if that kind of a bounce can be replicated in 2022 and 2023?

Related Tags

  • BSE
  • FIIs
  • FPIs
  • NSE
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