FPIs ended 2022 as net sellers, with outflows of over ₹1.21 lakh crore in Indian stocks. Will the tide turn in 2023?

 

• According to NSDL data, FPIs were net buyers in December with inflows of ₹11,119 crore into equities. This will be the third highest monthly purchases in 2022 after November where flows were ₹36,239 crore and ₹51,204 crore in August.

Foreign portfolio investors (FPIs) set 2022 as net sellers amid macroeconomic concerns, rising interest rate trends and geopolitical tensions. Notably, FPIs made purchases of around ₹24,608 crore through the primary market in 2023. This projects a total outflow of over ₹1.21 lakh crore in Indian equities in the year 2022. With the dollar moving down from lower levels, FPIs are expected to emerge as net buyers in 2023 if the greenback's uptrend holds.

According to NSDL data, FPIs were net buyers in December with inflows of ₹11,119 crore into equities. This will be the third highest monthly purchases in 2022 after November where flows were ₹36,239 crore and ₹51,204 crore in August.

August saw the biggest buying in 2022 from FPIs in Indian equities. While October was the month with the lowest sales as there was an outflow of around ₹8 crore in equity during 2022.

In the first six months of 2022, FPIs aggressively inflowed a record ₹2,17,358 crore. June was the most affected month with huge sales of ₹50,203 crore.

However, with more months of buying in the second half of 2022, FPI selling has moderated significantly. However, selling in equities for the full year 2022 is still at a record level of ₹1,21,439 crore.

Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, "As per NSDL data, FPIs have bought equities worth ₹6254 crore through exchanges till December 30. Total FPI purchases through exchanges for calendar year 2022 The sales figure of ₹1.46,048 crores.

But Vijayakumar also revealed that FPIs have invested ₹24608 crore through the primary market in 2023. This takes the net capital inflow to ₹121439 crore. (All are NSDL data).

Explaining the reason behind the selloff in FPIs during 2022, the strategist said, "The main triggers for net selling of FPIs in 2022 are rising interest rates in the US and INR depreciation."


Apart from equity, in 2022, FPIs pulled out ₹15,911 crore from the debt market. However, they were net buyers in debt-VRR and hybrid instruments with inflows of ₹3,791 crore and ₹746 crore, respectively. Overall, the withdrawals in the Indian market stood at ₹1,32,815 crore.

Both Sensex and Nifty 50 ended the year 2022 on a broadly positive note despite extreme volatility. The benchmark gained nearly 3%. The Sensex touched an all-time high of 63,583.07 and the Nifty 50 touched an all-time high of 18,887.60 on December 1, 2022.