FPI flows in 2022 – a tale in two parts
Foreign portfolio investorshave had contrasting views on India through calendar year 2022.
- While FPIs pulled out ₹2.32 lakh crore from Indian equities and bonds between January and June 2022, they pumped in ₹92,763 crore in the second half of the calendar year.
- Financial services majors received inflows of ₹14,205 crore in November itself.
- Analysts say this is due to foreign investors turning to domestic-facing sectors like banks and FMCG, which are “immune to global shocks”.
AdvertisementCapital flows from foreign portfolio investors (FPIs) in 2022 reflect two distinct trends – while the first half of the year witnessed an aggressive sell-off, the second half was about their return to the Indian markets.
FPIs offloaded Indian equities and bonds worth ₹2.32 lakh crore in the first half of 2022 – with the sell-off beginning in October 2021 as foreign investors anticipated the US Federal Reserve to embark on a quantitative tightening cycle. The sell-off continued through June this year – when the US Fed hiked rates thrice – after which the reversal started.
“FPI flows towards India and other emerging markets from July 2022 started to turn largely positive with bouts of moderate selling. The above behaviour could be again signalling that the aggressive rate hikes by the US Fed may be approaching its peak going ahead,” said a report by ICICI Securities.
During the first half of 2022, India’s benchmark indices – the Nifty50 and the Sensex, fell between 10.4-10.5%.
The reversal – exit Russia, enter India
While the US Fed is not done with the rate hikes just yet,
According to Hitesh Jain, lead analyst – institutional equities at Yes Securities, this reversal is thanks to investments exiting from Russia due to its war with Ukraine and finding their way to India.
“FIIs are now pouring money in domestic-facing sectors like banks and consumption stocks which are immune to global shocks and traction is apparent in terms of India’s credit growth and consumer spending,” he said.
Data shows FPIs are aggressively pouring money into sectors like financial services – out of the net equity investments of ₹36,238 crore in November, the financial services sector alone accounted for ₹14,205 crore.
Overall, at the end of November, FPIs held ₹16.35 lakh crore worth of financial sector assets under custody (AUC) across equity and debt segments, out of the total AUC of ₹53.98 lakh crore.
As far as the full year is concerned, the net investment by FPIs in Indian equities and bonds is still in the red, as FPIs have withdrawn ₹1.39 lakh crore so far.
Since the beginning of July, the Nifty50 and the Sensex have seen a huge rally – both gaining 18% – making them one of the best performers among the major indices of the world.
Analysts suggest there could be a slight moderation in
(With inputs from PTI)
RIL, Adani Enterprises are the biggest and most consistent wealth creators: Motilal Oswal
FPIs invest over ₹36,000 crore in Indian equities in November – Financial services is top favourite
RBI’s lower rate hike as expected, but Das’ commentary still hawkish, say analysts
Popular on BI
- A 'hole' 30 times Earth's size has spread across the sun, blasting solar winds that'll hit our planet by end of this week
- A former Twitter engineer said they watched colleagues 'drop like flies' from a virtual meeting during Elon Musk's mass layoffs
- I'm a software engineer who struggled with procrastination until I tried 'monk mode' — here's how it saves me up to 3 hours a day
- MSMEs on a growth path with rise in credit demand, fall in delinquency rates: CIBIL-SIDBI report
- Hindenburg report wipes out $526 million of Jack Dorsey's wealth
- First 82 days of 2023 see more layoffs than the entire 2022
- You will soon lose your legacy blue tick on Twitter – here’s everything you need to know
- Parineeta director Pradeep Sarkar passes away at 67