InvestorQ : Have FPIs turned aggressive buyers in the month of August 2022?
vaishnavi mhatre made post

Have FPIs turned aggressive buyers in the month of August 2022?

Answer
image
vidhya Laxmi answered.
2 months ago
Follow

If July was the month when FPI flows turned around to positive, August saw strong positive flows to the tune of more than $6.2 billion. The FPIs dispelled all fears that the FPI flows will not sustain in the coming weeks. This is commendable considering that between October 2021 and June 2022, FPIs were net sellers in equities to the tune of $33 billion in the Indian markets. July 2022 saw marginal net inflows of $618 million, while August was very strongly in the affirmative. The table below captures the FPI flows in August 2022 on daily basis.

Date

Net equity

flows (Rs cr)

Cumulative equity

flows (Rs cr)

Net equity

flows ($ Mn)

Cumulative equity

flows ($ Mn)

01-Aug-22

1,470.17

1,470.17

185.11

185.11

02-Aug-22

5,346.90

6,817.07

675.38

860.49

03-Aug-22

1,662.52

8,479.59

211.49

1,071.98

04-Aug-22

3,977.58

12,457.17

503.23

1,575.21

05-Aug-22

1,728.12

14,185.29

217.26

1,792.47

08-Aug-22

1,999.91

16,185.20

252.79

2,045.26

10-Aug-22

1,573.51

17,758.71

197.73

2,242.99

11-Aug-22

2,454.99

20,213.70

308.80

2,551.79

12-Aug-22

2,248.85

22,462.55

282.92

2,834.71

17-Aug-22

14,263.35

36,725.90

1,789.60

4,624.31

18-Aug-22

4,308.13

41,034.03

542.35

5,166.66

19-Aug-22

3,457.21

44,491.24

433.96

5,600.62

22-Aug-22

1,532.00

46,023.24

192.09

5,792.71

23-Aug-22

-346.34

45,676.90

-43.36

5,749.35

24-Aug-22

1,057.65

46,734.55

132.39

5,881.74

25-Aug-22

168.05

46,902.60

21.06

5,902.80

26-Aug-22

2,361.17

49,263.77

295.63

6,198.43

29-Aug-22

-113.57

49,150.20

-14.21

6,184.22

To cut a long story short, FPIs have infused a whopping Rs49,150 crore in equities in August or you can say $6.18 billion, which is ten-fold the inflows in July. It does look like the foreign portfolio investors are turning risk-on which is positive for India. Here are some of the key reasons that have resulted in the surge in FPI flows in the month of August 2022.

1) Indian economy appears to be doing well on growth and also on inflation management. The IMF has highlighted that India would be the fastest growing large economy at 7.2% despite a base of $3.5 trillion GDP. Inflation control has shown results with CPI and WPI inflation falling sharply in response to the hawkishness of the RBI. That is likely to have an accretive impact on real GDP.

2) Q1FY21 results are done and dusted and while it was a tough quarter, Indian companies have emerged looking good. Despite pressure on operating margins across most of the commodity sensitive industries, Indian companies did well on the top line; helped by price hikes if not volume growth. That shows a lot of resilience of Indian companies.

3) A very important role was played by the stable rupee which has taken support around the 80/$ level. That may be due to the support of the RBI, but that is understandable. These rupee levels assure investors of a good arbitrage on the currency too, apart from asset returns.

4 Views