FPIs pump $33.8 bn so far; total holding at record $592.5 bn

Of the close to $34 billion inflows this fiscal so far, as much as $8.4 billion came in December alone.

Foreign portfolio investors (FPIs) have pumped in a whopping $33.8 billion into domestic equities and debt till February 15 this fiscal year -- the highest since FY15 when it was nearly $46 billion --taking their net outstanding investments to a record $592.5 billion, as per a report.

Of the total FPI assets of $592.5 billion, $537.4 billion were in equities and $51.38 billion in debt, according to the data collated by Care Ratings.

The maximum holding is in financial services sector at $191.3 billion, followed by software ($76.1 billion), oil & gas ($50 billion), automobiles & auto components ($26.9 billion, pharmaceuticals & biotechnology ($22.8 billion), sovereign ($21.7 billion--debt), household & personal products ($20.2 billion), capital goods ($19.8 billion), food, beverages & tobacco ($15.7 billion) and insurance ($13.4 billion).

These 10 sectors account for around 78 per cent of total assets under FPI custody.

Of the close to $34 billion inflows this fiscal so far, as much as $8.4 billion came in December alone, the report said.

According to Care data, net FPI inflows were negative in both FY19 as well as in FY20.

In FY20 the net inflows were at (-) USD3 billion after the bloodbath in the markets following the announcement of the coronavirus as a global pandemic in March last year, leading to a 35 per cent plunge in the markets in that month alone.

After hitting an all-time high of $45.7 billion in FY15, net FPI investments have been fluctuating between positive and negative territories, with FY16 seeing a net pullout to the tune of $2.5 billion, and another major pullout of $5.5 billion in FY20, according to the data collated by Care Ratings.

Significantly, debt outflows have outnumbered inflows since FY16, registering negative net investments. However, the net debt flows were $18.5 billion in FY18.

Investors from the US account for 34 per cent of the total assets under custody, followed by Mauritius (11 per cent), Singapore (8.8 per cent), the Luxembourg (8.6 per cent), Britain (5.3 per cent), Ireland (4 per cent), Canada (3.4 per cent), Japan (2.8 per cent), and the Netherlands and Norway with a share of 2.4 per cent each.

These 10 countries account for 83 per cent of total FPI assets under custody.

In terms of equity, investors from the US account for nearly 37 per cent of the total, followed by Mauritius with a share of 11 per cent.

Singapore accounts for 29 per cent of the total debt investments followed by the Luxembourg at 11 per cent.

Singapore and the US account for a major proportion of hybrid investment with a share of 41 per cent and 28 per cent, respectively.

When it comes to the strong correlation between FPI flows and movements in the stock indices, it can be noted that $1 billion inflow over a period of three months can increase the Sensex by 1.6 per cent.