SynopsisThe outflow owes to changing investment strategy of FPIs amid soaring commodity prices as at over $94 per barrel, crude oil trades at the highest level since 2014. FPIs are now turning attention to commodity exporting countries such as Brazil and away from importers such as India.
Foreign portfolio investors (FPIs) sold Indian equities at a record pace thanks to flow rotation among emerging markets (EMs). Since October 2021, they have sold equities worth $11.5 billion (Rs 86,000 crore), according to the data from NSDL. This was higher than the net FPI outflow of $9.4 billion (Rs 43,000 crore) between March and November 2008 amid the subprime crisis.
FPIs were net sellers of Indian equities for five consecutive months to January.
The outflow owes to changing investment strategy of FPIs amid soaring commodity prices as at over $94 per barrel, crude oil trades at the highest level since 2014. FPIs are now turning attention to commodity exporting countries such as Brazil and away from importers such as India.
The unrelenting selling of FPIs has continued in February 2022. They sold Indian equities worth $1.9 billion (Rs 14,264 crore) so far, on top of $4.6 billion worth of selling in the previous month, one of the largest among key EMs and the second-highest monthly tally for India after $8.3 billion worth of selling in March 2020.
The gross buy-to-sales ratio of FPIs dropped to 0.84 in February 2022, compared with long-term average of 1.06. FPIs’ total equity assets under management (AUM) dropped by 7% to $639 billion at the end of January, compared with the peak AUM of $686 billion in November 2021.
The overall market ownership of FPIs in BSE500 stocks declined by 0.9% sequentially to a seven-quarter low of 20.7% in the December 2021 quarter.
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