FPI outflows in October less intense than March 2020, shows data

Selling by foreign portfolio investors (FPIs) so far in October is the highest ever in a calendar month, surpassing the March 2020 levels. However, comparing the assets under custody (AUC) of overseas investors shows that the intensity of selling is only the third-worst. AUC is the value of outstanding holdings. 

 

Until October 24, selling by FPIs stood at Rs 79,412 crore (an improvement from Rs 84,000 crore in outflow after factoring in inflows into the primary market, mainly due to Hyundai India’s initial public offering), which is 1.02 per cent of the FPI AUC of Rs 78 trillion and 0.18 per cent of India’s market capitalisation (mcap) of Rs 437 trillion.  

 

FPI outflows of Rs 58,632 crore in March 2020 were over 2 per cent of their AUC and 0.4 per cent of the India’s mcap back then. Given the greater velocity of selling at that time, the markets had crashed by 23 per cent. 

 

This time, the indices are down over 5 per cent — about one-fifth of the March 2020 fall — but still considerable and higher than previous bouts of large FPI selloffs. This month too, the fall could have been worse if it were not the strong Rs 93,000 crore of investments by the domestic institutions.