FII Tracker: $68 million a day! 2022 exodus worst in India history

NEW DELHI: Although the inflow of foreign funds on Dalal Street has been positive in the last 2 months of 2022, FIIs have sold Indian stocks totalling $16.5 billion, which translates into a daily average outflow of around $68 million in the calendar year.

Historical data shows that the unprecedented sell-off is not only more than the 2008 global financial crisis but also the worst ever.

Since 2001, FIIs have been net sellers during only 3 calendar years - 2008 (Rs 52,987 crore), 2011 (Rs 2,714 crore) and 2018 (Rs 32,628 crore). In Indian currency terms, the 2022 sell-off is worth Rs 1.2 lakh crore, shows NSDL data.


Had it not been for robust buying support from domestic institutional investors (DIIs), Nifty bulls would have fallen like ninepins under FII selling pressure. The index is up around 4.5% so far in the year.


Amid quantitative easing by global central banks in the wake of the Covid-induced financial crisis, Dalal Street was overflowed with helicopter money in 2020 and 2021. Much ahead of the withdrawal of liquidity by the US Fed, FIIs started pulling out funds from Dalal Street in October last year itself and have so far withdrawn the majority of the easy money of Covid days.

As the Fed started its most aggressive policy tightening in four decades in 2022, money moved away from equity to bonds with Wall Street traders playing long-inflation trade.

Hopes from New Year 2023

A poll of 21 analysts by ETMarkets shows that around 85% of them believe that 2023 will mark the return of foreign funds. DIIs are also expected to continue to support Indian equities.

Analysts point out that India's increasing weight in the MSCI to nearly 14.5% is now the second highest in the emerging market basket - ahead of Taiwan but about half of China.

"China is more attractive in terms of valuation but has issues regarding COVID and other social issues. This makes India more attractive to FIIs," said Satish Ramanathan of JM Financial AMC.

However, he said China opening up trade is still awaited and that could shift money away from India and other emerging markets in the short term.

On top of that, India's valuations are also not very attractive and investors globally have higher yielding fixed income securities to invest in rather than focus on EM equity assets.

Madanagopal Ramu of Sundaram Alternate Assets expects long-only funds to increase meaningful allocation to India as and when they see value opportunity, which can provide sufficient protection on the downside in specific sectors and stocks.

In CY 2022 till November, the bulk of FII selling was concentrated in the two sectors of financials and IT, both where foreign ownership is high. FIIs have so far sold financials worth $8,426 million and IT stocks worth around $8,834 million. Foreign flow has been positive in healthcare, materials, telecom, utilities and others.

"When FIIs and DIIs both are net buyers, indices can rocket ahead in next 3 years," said Amar Ambani, Group President and Head of Institutional Equities at YES Securities.

(With data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)