InvestorQ : How did FPI buying and selling in equities pan out in the month of May 2022?
Dawn Cherian made post

How did FPI buying and selling in equities pan out in the month of May 2022?

Mitali Bhutta answered.
8 months ago

There was no let-up in FPI selling in the month of May 2022. In fact, even after adjusting for the inflows into the LIC IPO and the Delhivery IPO, total FPI selling in May 2022 was closer to $5.2 billion. Now that is a huge sum. It looks like FPIs continue to be very wary of investing in India and still have continued with their risk off approach to Indian markets. What is more surprising is in the first 5 months of FY22, FPIs have sold close to $23 billion in equities and over the last 8 months since October 2021, FPIs have sold close to $29.3 billion.

Let us quickly look at the sector that saw the bulk of the FPI selling in May 2022. The big daddies of FPI selling were still the IT and the financial services sector in May 2022; a trend that has repeated over the last few months. In fact, to be specific, FPIs sold more than $2.08 billion worth of IT shares and $1.55 billion of financials in the month of May 2022. In fact, financials here include banks, NBFCs and also the insurance companies. While banks sold off on rate hike worries, the IT sector sold off on reduction in tech spending.

It was not just about IT and financials, but other sectors also saw selling in May, albeit to a lesser extent. For example, oil & gas saw FPI outflows of $461 million while the once preferred metals space saw outflows of $354 million. The windfall tax created concerns over the upstream oil companies and margins are an issue for downstream oil. Selling in consumer durables was at $349 million and in cement it was $187 million. In addition, the automobiles and construction sectors also saw some heavy selling by the FPIs.

A number of factors are driving this rush to sell by the FPIs. Russia continues to add to the geopolitical risk quotient even as oil is getting expensive in global markets. There is no respite from consumer inflation and wholesale inflation in India. With the US Fed looking all set to hike rates by another 200 bps in this year 2022 and the RBI likely to follow suit partially, the pressure of FPI selling is likely to continue.