 "FPI outflows exceed Rs 25,000 crore in Dec quarter, worst since Sept'15")
Foreign portfolio investors (FPIs) have already pulled out equities worth nearly $4 billion (over Rs 25,000 crore) so far in the December quarter, the worst since September 2015, amid uncertainty over US presidential election and prospects of hawkish US Federal Reserve’s policies. Back home concerns over demonetisation and delay in the implementation of Goods and Services Tax (GST) also weighed.
FPIs have been net sellers of Rs 24,429 crore in equities from October till December 21, data available with National Securities Depository Limited (NSDL) suggested.
They sold an additional Rs 1,178 crore on Wednesday, provisional figures available with BSE showed, taking total net outflows to Rs 25,607 crore.
Ravi Muthukrishnan, Co-Head, Institutional Research at ICICI Securities believes it has been a double whammy for India due to concerns around Fed rate hike and impact of demonetisation on earnings.
“FPIs may have sold most in sectors which have significantly been impacted on account of demonetisation such as realty, media, auto, finance, and FMCG,” he said.
Muthukrishnan added that FII outflows may continue in 2017 and would largely depend on two factors: a) the spread between interest rates in US and India, and b) how demonetisation impacts the quarterly earnings.
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“US appears more attractive for FIIs because the spread between interest rates in US and India is likely to get reduced with Fed intent on hiking rates for three times in 2017, and pressure on RBI to reduce rates now that inflation has come under comfort zone,” said Muthukrishnan.
Gaurang Shah, vice president at Geojit BNP Paribas, however, doesn’t see this as a major breakdown.
“Lack of participation on account of holidays and little bit of selling pressure has caused FII outflows. I believe they are being cautious ahead of the Budget 2017 as to what it holds for them and how things will pan out after US president-elect Donald Trump takes charge of Oval office in January,” said Shah.
AK Prabhakar. Head of research at IDBI Capital believes foreign investment will start picking up February onwards.
“Traditionally December quarter witnesses a lull in terms of FII inflows on account of holidays. December is year-end for them. They build their portfolio in January, therefore, I believe FIIs will start parking their money in India from February post Budget 2017,” said Prabhakar.
Meanwhile, the S&P BSE Sensex has corrected 6% to slip below 26,000 during the quarter.
Earlier, in July-September 2015 quarter, FPIs had made net outflow of Rs 17,316 crore. During the quarter, the benchmark index corrected 5.85% or 1,626 points to 26,155 from 27,781.
FPIs were net sellers for the third straight month, making it the worst period in last eight years. Between May 2008 and November 2008, in seven months, FPIs had sold net amount of Rs 43,875 crore ($9.6 billion) in equities.
An analysis of 282 companies from the BSE500 index in which FPIs held more than 10% stake as of September 30, 2016 showed that 116 stocks corrected upto 37% during the period.
Of these 116 stocks, nine stocks include Bharat Financial Inclusion, Manappuram Finance, Shriram Transport Finance, Delta Corp, Kajaria Ceramics and JK Lakshmi Cement has fallen between 30% and 37% on the BSE.
Total 33 stocks have seen their market values declined in the range of 20% to 30% till Wednesday.
| Company | FPIs stake in % | 30/09/2016 | 21/12/2016 | % chg |
| Delta Corp | 11.30 | 167.5 | 105.6 | -37.0 |
| Century Ply. | 12.84 | 250.4 | 161.0 | -35.7 |
| Repco Home Fin | 27.25 | 820.6 | 529.8 | -35.4 |
| Kajaria Ceramics | 27.19 | 693.2 | 450.4 | -35.0 |
| Bharat Financial | 70.29 | 879.8 | 578.6 | -34.2 |
| Godfrey Phillips | 10.02 | 1287.6 | 869.4 | -32.5 |
| Manappuram Fin. | 17.97 | 91.6 | 62.3 | -32.0 |
| JK Lakshmi Cem. | 12.20 | 496.7 | 339.8 | -31.6 |
| Shriram Trans. | 30.29 | 1162.2 | 809.4 | -30.4 |
| M & M Fin. Serv. | 32.48 | 363.4 | 256.0 | -29.6 |
| JP Associates | 17.20 | 10.5 | 7.5 | -28.7 |
| Unitech | 11.14 | 5.9 | 4.3 | -27.2 |
| Manpasand Bever. | 19.39 | 752.6 | 548.4 | -27.1 |
| Indian Hotels | 13.39 | 130.8 | 96.1 | -26.5 |
| Asian Paints | 19.18 | 1162.1 | 866.3 | -25.5 |
| H D I L | 46.30 | 79.6 | 59.4 | -25.4 |
| Bajaj Fin. | 19.40 | 1056.6 | 788.3 | -25.4 |
| Berger Paints | 12.23 | 261.1 | 195.2 | -25.2 |
| J K Cements | 11.24 | 874.6 | 661.3 | -24.4 |
| JK Tyre & Indust | 12.16 | 148.1 | 112.0 | -24.4 |
| Foreign portfolio investors stake in % as of September 30, 2016 | ||||
| BSE500 stocks | ||||