Foreign funds’ share in India equities at 19.5%, lowest since March ’19

Advertisement



Foreign funds’ ownership in domestic equities fell to pre-COVID lows and hit a multi-year low of 19.5 per cent in March this year in NSE500 companies valued at USD 619 billion, shows an analysis.

At 19.5 per cent the FPI ownership in March 2022, is the lowest in the past three years, when it was 19.3 per cent in March in 2019, which was a pre-COVID period.



On a year-on-year basis their ownership stood at 21.2 per cent, the second highest on record in March 2021, according to a report by the Wall Street brokerage Bank of America Securities India.

Foreign funds’ ownership in the domestic equities was at 18.6 per cent in December 2017, the lowest in five years, and the peak was in December 2021, when they owned 21.4 per cent of domestic equities.

Significantly, the share loss of foreign portfolio investors (FPIs) has been well corrected by the steeply rising ownership of the stocks by domestic funds, who pumped in USD 6 billion in March and USD 14.6 billion in FY22, the report said.

Advertisement

Of the USD 619 billion of FPI ownership, the highest incremental allocation were in energy stocks with 16.2 per cent, followed by IT at 14.8 per cent, and communication services at 4 per cent.

In overall allocation, financials still led the chart with 31.4 per cent followed by discretionary (9 per cent).

March alone saw the sixth consecutive month of FPI outflows, which was the most severe since March 2020 (after the pandemic scare) on the back of continued geopolitical risks, elevated inflation led by supply side issues, rising commodity costs, said the report.

Even amidst the pullout emerging market funds have been steadily increasing their allocation to India (19 per cent in March vs 13.3 per cent in January 2021) as against China (34.6 per cent in March vs 42.2 per cent in January 2021).

Similarly, MSCI India valuation premium to emerging is still at 38 per cent and to the world at 10 per cent above the respective long term average remains elevated, but in the long-term, this premium is justified as India is better placed amongst emerging markets, the report said.

Apart from India, other emerging markets, including Taiwan, Korea and the Philippines also saw massive outflows so far this fiscal.

The record fall was mainly due to the massive outflows of USD 5.4 billion in March and a whopping USD 15.7 billion in FY22. Such a massive pullout came after they pumped in USD 23 billion in 2020 and USD 3.7 billion in 2021.

Advertisement

The Wall Street brokerage expects the market to trade sideways in the near-term, given the sore inflation impacting volume growth and margins across several sectors.

The brokerage has not offered any upside to its December Nifty target of 17,000 points but said it prefers financials, industrials, select autos among cyclicals and utilities and healthcare among defensives.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practice the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard,

Digital Editor





Source link

Leave a Comment

Your email address will not be published.