What FPIs bought and sold in the first half of April 2023

The NSDL puts out the FPI action on a fortnightly basis, highlighting the sectors where the FPIs were net buyers and where they were net sellers. Year 2023 had begun on a cautious note. FPIs were aggressive sellers in January 2023 and had been subdued sellers in February 2023. In March, the FPIs had turned net buyers. However, scratch the surface, and the positive figure was driven by the massive $1.9 billion investment by GQG Partners into the Adani group. If you remove that block deal, then the FPIs were still net sellers in the month of March too. However, April 2023 has been slightly different in the sense that even without any of these big block deals, the FPIs have been net buyers and have already infused over $1 billion into Indian equities.

FPI action in April 2023, so far

In the first 3 weeks of April 2023, the FPIs have infused $1.07 billion into Indian equities on a net basis. This was the figure even at the end of two weeks and in the third week of April, FPIs were largely neutral with some selling pressure in select IT stocks like Infosys. The overall AUC (assets under custody of the FPIs overall stood at $560 billion as of the end of the first fortnight of April 2023.

That is approximately where it was at the close of March also, so not much has changed on that front. But the positive feature of the month has been the spread of buying. Out of the 23 sectors that NSDL reports on a regular basis, 16 sectors saw net buying in the first fortnight of April 2023 while 7 sector saw net selling in the same period. While we await the full trend from April, the start appears to be positive.

Sectors where FPIs were net buyers in April 2023 first half

The table below captures the list of sectors where the FPIs were net buyers in the first fortnight of April 2023.

Data Source: NSDL

The intensity of the buying can be seen from three perspectives and we shall look at each of the 3 perspectives. Firstly, in terms of the number of sectors that saw net buying in the first fortnight of April 2023 were 16 out of 23 sectors. Secondly, the sectors that saw net buying saw net inflows of $1.20 billion into equities in the first fortnight of April. Also, the assets under custody (AUC) of sectors that saw net buying stood at $470 billion. In other words, the sectors that saw net buying accounted for 84% of the overall AUC of FPIs.

Sectors where FPIs were net sellers in April 2023 first half

The table below captures the list of sectors where the FPIs were net sellers in the first fortnight of April 2023.

Data Source: NSDL

How was the intensity of selling? It was relatively tepid compared to the buying. Firstly, in terms of the number of sectors that saw net selling in the first fortnight of April 2023 were just 7 out of 23 sectors, and even there the selling was marginal in most sectors. Secondly, the sectors that saw net selling saw net outflows of just about $130 million from equities in the first fortnight of April. Also, the assets under custody (AUC) of sectors that saw net selling stood at $90.2 billion. In other words, the sectors that saw net selling accounted for 16% of the overall AUC of FPIs.

Where FPIs sold and where they were buyers in April first half?

Let us first look at the sectors where the FPIs were net buyers in the first fortnight of April 2023. FPIs infused $538 million net into BFSI sector, where the results are expected to be very strong in the March quarter. This sector comprising predominantly of banking and NBFCs has been seeing the net interest income (NII) growing rapidly while net interest margins (NIMs) have widened. That is because the pace at which the cost of deposits has grown has not kept pace at which the yield on loans has grown.

The second sector that saw net buying of $154 million was the automobiles sector. Autos are expected to report strong Q4 numbers helped by a surge in demand, huge waiting queues and a revival in CV demand and tractor demand. The third sector that saw buying to the tune of $122 million was the IT sector, which is surprising, but there was some value buying in mid cap IT stocks and in TCS, which is expected to be less vulnerable to the vagaries of global tech spending. Other sectors like metals and capital goods also witnessed strong buying in the first half of April.

What about the sell candidates in the first fortnight of April 2023? That list was dominated by oil and gas sector. Reliance has been seeing some unwinding but the company did witness very solid results late last week. FPIs have been wary of oil companies due to the volatility in crude prices, OPEC policy uncertainty and the volatility in the refining margins as well as in downstream petchem margins. The only other sector to see meaningful selling was the realty sector.

Overall, it has been a strong and solid start to FPI flows in April 2023. The results of Q4FY23 have just about started trickling in and it remains to be seen if the FPIs view the results story positively. That will be the big story for April full month and a better part of May 2023.