Which sectors did FPIs buy and sell in May 2023

After months of uncertainty and ambivalence in FPI flows, the month of May has seen flows that are not just significant but also decisive. FPIs infused more than $3 billion in the first 15 days of May 2023. For the month, NSDL, as is the practice, has put out the fortnightly flows of FPIs sector wise. But, first let us look at the quantum of FPI flows in May 2023 first half.

How FPI flows panned out in May 2023?

The table below captures the day wise FPI flows into equity in the first half of the month of May 2023. For a change, the FPIs have been net buyers in equities on all the days in the first fortnight of May.

Data Source: NSDL

As can be deciphered from the above data, FPIs have infused ₹24,739 crore into Indian equities on a net basis in the first half of May 2023. Out of this ₹24,739 crore of FPI inflows in the first half of May, ₹20,204 crore came in the form of secondary market flows from FPIs while the balance ₹4,535 crore came from the IPO inflows. Of the IPOs, the Mankind IPO was the one that attracted a lot of FPI interest in the first half of the month.

How was the sectoral mix of FPI flows in H1-May23

Let us now turn to the sectoral flows of FPIs and how this $3.02 billion of inflows was spread across different sectors in the first half of May 2023. Let us first look at the sectors with the positive net flows in the first half of May 2023.
 

Data Source: NSDL

Out of the 23 sectors that are tracked by the NSDL, 13 sectors have received positive inflows in the first half of May 2023. Here are some key highlights.

•    The inflows were led by financial services at $1.02 billion, which is not surprising considering the stellar results posted in the fourth quarter by banks and NBFCs. Indian banks have benefited from sharply higher NII and a boost to the net interest margins (NIMs). That is due to bank lending yields going up much quicker than the cost of deposits. Also advances growth is much better than deposit growth.

•    Auto, is  rate sensitive sector likely to benefit from the pause in rate hikes by the RBI. Also, most auto sales numbers are looking robust and there appears to be a turnaround in demand. Lower input prices have helped too. Autos got inflows of $572 million.

•    Oil & Gas, pharmaceuticals and FMCG got net FPI inflows of over $200 million in the first half of May 2023. While oil & gas buying was interest in upstream oil stocks, FMCG was a bet on revival in rural demand while pharma flows were largely driven by FPI interest int eh Mankind Pharma IPO.

•    Other sectors like capital goods and consumer goods saw FPI inflows to the tune of over $100 million. Capital goods companies have been seeing huge bets after the latest L&T numbers which indicated at a sharp revival in order book positions, execution and profitability of these capital goods companies.

On the downside, there were some companies that also attracted FPI selling, although they were just a handful of them. Sectors like Media, power, construction, and IT saw marginal selling even in a robust month. IT has been a well narrated story while media selling was largely on the back of selling in the Zee counter. Overall, it was a month of robust flows into most sectors, even as IT continued to be low on the priority list of FPIs.

How did the AUC sum up for the fortnight?

The assets under custody (AUC) for the first quarter is an illustration of how much of value FPIs are holding at the end of the fortnight. The table below captures the 17 sectors out of the 23 sectors that have AUC of more than $10 billion.
 

Data Source: NSDL

Here are some broad trends from the AUC as of mid-May compared to end of April 2023. Financial Services is back in the limelight with AUC getting very close to the $200 billion mark. The AUC of IT and oil have come down sharply over the last on year and IT had recently slipped to third spot after a long time. The two sectors that are seeing substantial build-up in FPI AUC are the FMCG sector and the auto sector. Clearly, these are the two sectors that have seen a lot of traction, apart from financial services, in terms of FPI flows.

To sum it up, FPIs put up a robust show in the first half of May 2023 infusing nearly $3.02 billion. Financial services take the chunk, followed by auto, FMCG, metals and pharma. However, IT continues to be on the neglect list of the FPIs for now. Even in a robust month of FPI flows, the global investors hardly evinced any interest in IT stocks.