FPI selling: 93 per cent of FPI sales in the last 12 months came from two sectors; Any idea?

In its latest report,

said the bulk of FPI sales FMCG, with other services and construction materials contributing 93 per cent, is focused around financials and IT on a rolling 12-month basis. The brokerage said inflows were witnessed in metals, power, discretionary consumption and telecom during this period.

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Overall, last 12-months FPI The sell-off has eclipsed the outflow seen during the global financial crisis.

“Ongoing FPI sales in Indian equities are becoming the best selling spree since the 2008 global financial crisis (GFC), with TTM FPI cumulative sales of $53 billion against $28 billion in the secondary market. GFCAs per provisional flow data from exchanges,” it said.

Total FPI equity assets as on June 15 stood at Rs 41.5 lakh crore, which translates into a 17 per cent share of the total listed Indian equities (Rs 245 lakh crore) and is a decline of nearly 300 basis points from March 20, 2021 levels. Percent). That said, ICICI Securities noted that the 12-month net institutional outflows, which include DII inflows based on provisional data for secondary market inflows, are relatively low at $10.6 billion, supported by significant inflows of $8.6 billion. The GFC peak is compared to the outflow. from DII of $42.5 billion.

Consequently, the brokerage said, the impact on the benchmark index (NIFTY50, Nifty Midcap) is much less (fall 15-25 per cent) than that of GFC.

Using final FPI inflows data from NSDL, including primary inflows, the 12-month back outflow from FPIs is much lower than the $32 billion supported by record IPO-related inflows in the past one year.

ICICI Securities said the massive outflow from Indian equities by FPIs is largely driven by fears of aggressive quantitative tightening by the US central bank to moderate inflation and relatively higher valuations of Indian equities.

But valuations have largely rationalized from October 2021 levels and fears of a structural rise in inflation are easing as global commodity prices have tumbled in recent days, which should give rise to bearish confidence. FPI outflow Incrementally, it said.

“The risk remains in terms of CPI inflation and growth in crude oil prices, which have not yet come down significantly from their recent peaks,” the brokerage said.

Analysts in the ETMarkets Midyear Survey said they do not expect the situation to improve, as they believe risk appetite will take time to return.

There is an old saying: When America sneezes, the world catches a cold. Analysts said the US slowdown would have a contagious effect on other economies. Yash Shah, Head of Equity Research, Samco Securities, said historically, whenever commodity prices have risen, the chances of a recession are high.

“This is also why globally, the sell-off continues. In the past several deep market corrections and recessions, the market stopped falling when the Fed intervened and loosened monetary policy. This is no longer a possibility, given that That interest rates are lower than the rate of inflation. So, if a slowdown strikes, it may be challenging for equity markets to hold on,” Shah said.

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