FII stock ownership falls to 19.9%, valued at $582 billion


Cumulative FPI outflows hit a record $14.6 billion, of which $5.4 billion was withdrawn in March alone

Cumulative FPI outflows hit a record $14.6 billion, of which $5.4 billion was withdrawn in March alone

After a record US$23 billion of additional investment in domestic equities in FY21, overseas funds massively reduced their new exposure to the country to US$3.7 billion in FY22 and also their holdings in the NSE 500 to 19.9% or valued at $582 billion, down 21.4% from its peak, Bank of America Securities India said in a report.

During the fiscal year through earlier this week, cumulative FPI outflows hit a record $14.6 billion, of which up to $5.4 billion was drained in March alone, while February saw another, according to the analysis Record deduction of US$4.7 billion.

The value of FPI holdings as of March 15, 2022 was $582 billion (vs. $667 billion in September 2021), of which IT (15%, up 87 basis points), energy (15.5%, up 44 basis points), health care (4.9%, up 22 basis points) saw a higher allocation.

On the other hand, the allocation to financials fell 107 basis points to 31.5%.

Domestic fund holdings were US$265 billion as of February 2022 after US$13.1 billion reallocated.

However, according to a previous BofA report, the FPI stock value is down from a record $667 billion in the first half of fiscal 22, recorded between Jan.

The value of FPI’s holding was $555 billion as of March 2021, which was a full $105 billion more than the value between September 2020 and March 2021.

According to the report, the market is not bleeding much because domestic institutional investors were very active and invested $13.1 billion in the year, including $5 billion in February alone, leaving the net outflow from the market at only $1.5 billion. dollars remains.

BofA also noted that March’s $5.4 billion FPI outflows marked the sixth consecutive month of outflows, raising the cumulative pullback to $14.6 billion on heightened geopolitical risks let.

March outflows were the heaviest since March 2020 after the pandemic hit the world.

The market has been nervous since late March after Russia invaded Ukraine. Outflows continued to gain momentum as the US Federal Reserve hiked interest rates by 25 basis points and maintained plans for six more rounds of rate hikes this year.

While the FPI’s ownership of domestic shares peaked at 21.4% in December 2020, which fell to 21.2% in March 2021, it continued to decline to 19.9% ​​by December 2021, according to the report.

In comparison, FII inflows to other emerging markets so far in 2022 have been met with strong outflows, while Brazil-led inflows of $11.7 billion have been recorded.

On March 15, energy ($74 million and healthcare ($46 million) saw inflows, while other sectors such as financials ($2.9 billion), industrials ($651 million) and discretionary stocks saw inflows ($1.2 billion) had negative inflows), making for the highest outflows since March 2017.

IT outflows ($80 million) declined significantly after two consecutive months of high outflows (average $1.8 billion).

In 2021, the primary market witnessed a song with record IPO fundraising of $16 billion and while volatility has slowed or delayed primary issuance, the pipeline remains strong for 2022 with an estimated $13 billion when LIC’s $8 billion offering goes through.

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