Record month of FPI flows in December 2023
The signs of a turnaround in FPI sentiments were visible in the last week of November itself, but the real impact was only felt in the month of December. For the month of December 2023 alone, FPIs infused close to $8 billion into equity and if you added debt then the total flows in December 2023 were more than $10 billion. FPI AUM is now at a record high of $737 billion and this is well above the previous October 2021 peak of $667 billion. The FPI AUM struggled for nearly 2 years to get back to that mark and in the month of November 2023, it just crossed that mark. However, in December 2023, the FPI AUM has taken a decisive lead. The FPI inflows into equity in December 2023 appears to have more than compensated for the FPI selling witnessed in the months of September and October
What triggered the surge in FPI flows in December 2023?
There were several reasons that triggered a turnaround in FPI sentiments in December; as it built on the gains seen in the last week of November 2023. Several factors added up.
Above all, FPIs are also betting on the sustenance of the reforms process and the rather hackneyed reality that India could move to become a $5 trillion economy over the next 7 years. That is a huge fundamental bet on the Indian economy for the FPIs.
FPI AUC scales to record $738 billion in Dec-23
Assets under custody (AUC) is the closing market value of all equities held by FPIs. The AUC is a function of flows and also the movements in major stock market indices. In December, it was substantially a function of both; FPI flows and value accretion of the portfolio. In fact, the FPI AUC is up a whopping 17.4% in just the last 2 months between the end of October and the end of December 2023. Why this number is relevant is that it is now substantially higher than the earlier peak of $667 billion achieved on FPI AUC in October 2021. After a gap of over 2 years, the FPI AUC has once again scaled up, thanks to the index rally. The table below captures the top sectors in terms of FPI AUC as of December versus November 2023.
Industry |
FPI AUC (Dec 2023) |
FPI AUC (Nov 2023) |
Financials (BFSI) |
234.28 |
216.15 |
Information Technology (IT) Services |
72.19 |
65.80 |
Oil & Gas |
62.48 |
56.70 |
Fast Moving Consumer Goods (FMCG) |
50.47 |
46.63 |
Automobiles and Auto Components |
49.45 |
46.14 |
Healthcare and Pharmaceuticals |
40.17 |
38.08 |
Capital Goods |
32.55 |
29.79 |
Power (generation and transmission) |
29.92 |
24.20 |
Consumer Durables |
24.46 |
22.90 |
Metals and Mining |
22.64 |
19.37 |
Consumer Services |
22.03 |
20.49 |
Telecommunications |
19.83 |
18.96 |
Construction |
16.59 |
14.50 |
Cement |
14.15 |
12.18 |
Services |
13.28 |
11.47 |
Realty |
13.01 |
11.90 |
Chemicals |
12.46 |
11.69 |
Top 17 Sectors |
729.98 |
666.93 |
Other 6 sectors |
7.80 |
7.74 |
Total FPI AUC |
737.78 |
674.67 |
Data Source: NSDL
The table above captures the top 17 sectors with AUC above $10 billion as of the close of December 2023. NSDL has pruned the list of sectors from 40 to 23. Out of these 23 sectors that FPIs invested in, AUC of the top-17 sectors accounted for 98.94% of total FPI AUC of $737.78 billion. The FPI AUC has scaled a new historic peak in this month of December 2023, which is not surprising considering that Nifty and Sensex are at life-time highs. Let us turn to the specific sectors in terms of AUC and how they have moved over previous month.
At $234.28 billion, it is the BFSI sector that has continued to dominate the AUC stakes. The AUC of financials accounts for nearly 32% of the total AUC of FPIs. That roughly corresponds with the share that these financials have in the Nifty index composition. The other key sectors by AUC viz. IT, Oil, FMCG, healthcare, and capital goods have all seen AUC getting a boost in December 2023. The big gainers in terms of accretion in AUC included sectors like financials, IT, capital goods, and power. Let us turn to the sectors where FPIs were active.
FPI buying in December 2023 driven by BFSI sector
In a month when the FPI action was decisively positive, there would be substantially larger number of sectors where FPIs were net buyers, than where they were net sellers. Here is a sectoral break-up of the positive net FPI inflows into Indian equities in December 2023, with the colour of flows broken into first half and second half of the month.
FPI Flows |
H1-Dec 23 |
H2-Dec 23 |
Dec-23 |
Financial Services (BFSI) |
2,752 |
755 |
3,507 |
Others (IPOs) |
492 |
198 |
690 |
Information Technology |
171 |
453 |
624 |
Capital Goods |
359 |
254 |
613 |
Healthcare |
415 |
27 |
442 |
Cement |
241 |
200 |
441 |
Automobiles and Ancillaries |
398 |
40 |
438 |
Consumer Services |
643 |
65 |
408 |
Data Source: NSDL
The BFSI sector accounted for nearly 45% of the total flows in the month at $3.51 billion. Among the other sectors that got positive inflows were IT, capital goods, healthcare cement and auto. The others list typically refers to the IPO market where FPI flows have been quite robust in the last few weeks. There were a mix of active and passive flows in December.
FPI selling was very limited in December 2023
Here is a sectoral break-up of the FPI outflows from Indian equities in the month of December 2023, with the colour of flows broken into the first half and second half of the month, for a more granular picture.
FPI Flows |
H1-Dec 23 |
H2-Dec 23 |
Dec-23 |
Media Entertainment |
-146 |
-4 |
-150 |
Realty |
-12 |
-68 |
-80 |
Oil & Gas |
-475 |
+411 |
-64 |
Data Source: NSDL
Actually, not much is seen on the selling front, which is not surprising in a month when the FPIs infused $8 billion into the equity market. Media and entertainment did see selling, but the media sector in India is still dominated by Zee. Hence any action of FPIs pertaining to the one stock tends to get reflected very strongly on the sector. Realty and oil & gas also saw subdued selling, but that looked more like profit booking at higher levels. One reason could also be that FPIs were reducing their trading positions towards end of the month of December 2023 as they preferred to go light into 2024, especially in counters that had a penchant for volatility.
It was a month dominated by FPI buying and that is the reason, the selling sectors are few and far between. However, the markets must be prepared that FPIs could allocate out of India as other emerging markets in Asia are relatively more attractive compared to India in valuation terms. For now, the FPIs are firmly on the side of India and the heavyweight sectors are benefiting the most from that trend.
Big picture on FPI flows for December 2023
Here is how the FPI flows up to end-December 2023 on a cumulative basis looked like. We are talking flows across IPOs, secondary equities, hybrids, and debt.
Calendar Month |
FPI Flows Secondary |
FPI Flows Primary |
FPI Flows Equity |
FPI Flows Debt/Hybrid |
Overall FPI Flows |
Calendar 2022 |
(146,048.38) |
24,608.94 |
(121,439.44) |
(11,375.78) |
(132,815.22) |
Jan-2023 |
(29,043.32) |
191.30 |
(28,852.02) |
2,308.27 |
(26,543.75) |
Feb-2023 |
(5,583.16) |
288.85 |
(5,294.31) |
1,155.19 |
(4,139.12) |
Mar-2023 |
7,109.65 |
825.98 |
7,935.63 |
-2,036.42 |
5,899.21 |
Apr-2023 |
9,792.47 |
1,838.35 |
11,630.82 |
1,913.97 |
13,544.79 |
May-2023 |
38,093.11 |
5,745.00 |
43,838.11 |
4,491.44 |
48,329.55 |
Jun-2023 |
45,736.71 |
1,411.63 |
47,148.34 |
9,109.36 |
56,257.70 |
Jul-2023 |
37,292.82 |
9,324.94 |
46,617.76 |
1,359.32 |
47,977.08 |
Aug-2023 |
9,232.57 |
3,029.71 |
12,262.28 |
6,075.54 |
18,337.82 |
Sep-2023 |
(14,576.40) |
(191.10) |
(14,767.50) |
957.11 |
(13,810.39) |
Oct-2023 |
(28,299.00) |
3,751.34 |
(24,547.66) |
6,672.20 |
(17,875.46) |
Nov-2023 |
(368.40) |
9,369.18 |
9,000.78 |
15,545.63 |
24,546.41 |
Dec-2023 |
58,372.70 |
7,761.96 |
66,134.66 |
18,402.77 |
84,537.43 |
Flows for 2023 ₹ |
1,27,759.75 |
43,347.14 |
1,71,106.89 |
65,954.38 |
2,37,061.27 |
Flows for 2023 $ |
15.50 |
5.24 |
20.74 |
7.96 |
28.70 |
Data Source: NSDL (₹ flows are in crore and $ flows are in billions)
Here are some key takeaways from the FPI summary flow numbers.
Between the end of November 2023 and December 2023, the FPI AUC moved up from $675 billion to $737 billion. This $62 billion accretion in FPI AUC can be explained by $21 billion of equity inflows and the balance $41 billion from the rally in the indices to new highs in the month of December 2023.
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