Holding of FPI in BSE-200 index decreased, DII increased

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12% erosion from the all-time high level in the Indian stock market

MUMBAI: Foreign institutional investors (FPIs) have been selling heavily in the Indian stock market since October 2021. As a result, FPIs' holdings in companies in the BSE-500 index fell to 3% at the end of the December quarter. However on the other hand amidst pleasant surprises the holding of these local institutional investors has increased.

According to a market report, companies' holdings in the BSE-500 index, including global depository receipts and US depository receipts, fell to 8% in the quarter ended December, from 2.3% in the previous quarter. On the other hand, the shareholding of domestic institutional investors in the companies in the index rose to 17.5 per cent from 17.1 per cent during the period under review.

In the last quarter of 2021, foreign investors invested Rs. Shares worth Rs 30,000 crore were net sold. Their outflow from October will soon reach Rs. 5 lakh crore, although in the meantime, local investors have raised Rs. It has offset a massive outflow of foreign investors by borrowing Rs 1.5 lakh crore.

Rising bond yields and the recent adversity of the Ukraine-Russia war have pushed foreign investors to sell at a faster pace, amid fears that the US Federal Reserve will raise interest rates to stem inflation.

The Indian stock market has been undergoing a correction since December and key Indian stock market indices have fallen more than 15 per cent from their all-time highs.

In the December quarter, foreign investors sold the most shares of banks, FMCG, IT, metals and mining companies, while those of Capital Goods, Real Estate and Telecommunication Services companies bought shares.

On the other hand, local institutional investors-mutual funds bought shares of banks, IT services and telecommunication services companies while selling shares of electric utilities, metals and mining sectors.

If we talk about performance by sector, from January 1 to October 15, 2021, all the indices increased in double digits. The Metal Index was the top gainer index at 3%, followed by the IT Index at 20%, the Energy Index at 9%, the Infrastructure Index at 9% and the Bankex at 4%.

Metal stocks remained bullish on rising commodity prices and demand amid rising construction activity in the country. So strong orders and strong growth in earnings also boosted IT stocks. Rising demand for credit amid rising capital expenditure has been a driving force for banks.

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