7 mins read . 23 May 2023
To be fair, it is just the first half of May 2023 that is done and dusted. In the fortnightly report issued by NSDL, foreign portfolio investors had infused a full $3 billion in the first half of May 2023. What is more, they were net buyers in equities on each of the trading days in the first half of May. We will come back to the reasons later. What is material is that due to the strong inflows in May, the FPIs turned net buyers for the calendar year 2023, till date. That is a far cry from the FPIs selling $34 billion worth of equities between October 2021 and June 2022. In the first 15 days of May 2023, FPIs infused more than $3 billion with a preference for financial services, autos, oil and FMCG stocks. However, FPIs continued to be net sellers in IT, albeit to a very small extent.
Let us quickly capture the FPI equity flows for the first half of May 2023; both in rupee terms and also in dollar terms. FPIs infused Rs24,739 crore or $3.02 billion into Indian equities in the first fortnight of May 2023. Here are the granular details.
|Date||FPI Flow (₹ Crore)||Cumulative flows||FPI Flow($ billion)||Cumulative flow|
Data Source: NSDL
What was the contribution of the IPO market and how much came through the secondary markets in terms of FPI flows. As per the NSDL report, out of Rs24,739 crore of FPI inflows in the first half of May, Rs20,204 crore came in through the secondary markets from FPIs while the balance Rs4,535 crore came from IPO inflows. Of the IPOs, the Mankind IPO was the one that attracted a lot of FPI interest. While FPIs were also active in the Nexus Select REIT IPO, that would be factored only in the second half of May. With all days of the first fortnight of May 2023 seeing positive flows, the indications are of strong flows in May 2023 overall.
Let us look at these FPI flows in terms of sectoral mix. Obviously, when the net flows have been $3.02 billion in the first fortnight of May 2023 with net buying on all days, there is bound to be a bias on the buy side. That was the story, anyway. Here is the picture of sectoral buying by the FPIs in the month of May 2023.
|Sectoral Buying by FPI||Net FPI Flows ($ Million)|
|Automobile and Auto Components||572|
|Oil, Gas & Consumable Fuels||282|
|Fast Moving Consumer Goods||202|
Data Source: NSDL
Out of the 23 sectors tracked by NSDL, 14 sectors witnessed positive inflows in the first half of May 2023. Here are some key highlights.
On the downside, there was marginal selling in IT and media. We will leave the media story out as it was largely about Zee, but it is rather surprising that FPIs are not interested in buying IT stocks even after the correction. It looks like the problems in the US banking sector and weak tech spending could be things the FPIs are not comfortable with.
The good news is that out of the total assets under custody (AUC) of FPIs worth $583 billion, the BFSI sector alone accounts for $200 billion or nearly 34.3%. In terms of sectors that saw accretion in AUC in the first half of May, it was BFSI, followed by automobiles, FMCG, healthcare, capital goods and metals. Needless to say, IT was the sector that saw AUC depletion once again; a trend that has become commonplace in recent months.
It may be too early to celebrate but it does look like the FPIs are back in Indian equities with a bang. The combination of good Q4 results, relatively better valuations and the GDP growth promise apparently looks too alluring for the FPIs.
Data Source: NSDL