Pumping in $33.8 bn so far this fiscal, FPIs' holding at record $592.5 bn

Inflows are highest since FY15

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

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

The maximum holding is in financial services sector at USD 191.3 billion, followed by software (USD 76.1 billion), oil & gas (USD 50 billion), automobiles & auto components (USD 26.9 billion, pharmaceuticals & biotechnology (USD 22.8 billion), sovereign (USD 21.7 billion--debt), household & personal products (USD 20.2 billion), capital goods (USD 19.8 billion), food, beverages & tobacco (USD 15.7 billion) and insurance (USD13.4 billion).

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

Of the close to USD 34 billion inflows this fiscal so far, as much as USD 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 USD 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 USD 2.5 billion, and another major pullout of USD 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 USD 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 USD 1 billion inflow over a period of three months can increase the Sensex by 1.6 per cent.