FPIs end 2022 as net sellers with outflow of over ₹1.21 lakh cr in Indian stocks. Will the tide change in 2023?

As per NSDL data, FPIs were net buyers in December with an inflow of ₹11,119 crore in the equities. This would be the third biggest monthly buying in 2022 after November where the inflows were at ₹36,239 crore and August where they bought ₹51,204 crore.

August saw the biggest buying in 2022 from FPIs in Indian equities. While October was the lowest selling month as outflow stood at nearly ₹8 crore in the equities during 2022.

In the first six months of 2022, FPIs carried outflow aggressively to a record of ₹2,17,358 crore. June was the worst-hit month with selloffs at a massive ₹50,203 crore.

However, with more months witnessing buying in the second half of 2022, FPIs selloff did minimised drastically. However, the selling are still at a record of ₹1,21,439 crore in the equities for the entire year 2022.

Dr.V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “As per NSDL data, FPIs have bought equity for ₹6254 crores through the exchange up to 30th December. The total FPI sell figure through the exchange for CY 2022 is ₹1,46,048 crore.”

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

Explaining the reason behind the selloff in FPIs during 2022, the strategist said, “The main trigger for the FPI net selling in 2022 is the rising interest rates in the US and INR depreciation.”

Apart from equities, in 2022, FPIs removed ₹15,911 crore from the debt market. However, they were net buyers in debt-VRR and hybrid instruments with an inflow of ₹3,791 crore and ₹746 crore. Overall, the outflow 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 benchmarks gained by nearly 3% each. On December 1st, 2022, Sensex touched a lifetime high of 63,583.07 and Nifty 50 a historic high of 18,887.60.

However, the benchmarks were in red on the last working day of 2022. On December 30th, Sensex closed at 60,840.74 down by 293.14 points or 0.48% and Nifty 50 finished at 18,105.30 below 85.70 points or 0.47%.

Going ahead, Vijayakumar said, “Now it appears that the dollar has bottomed out. The dollar index is now below 104 from its recent peak of 114. If this trend sustains. FPIs are likely to turn buyers in India in 2023.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.