FPIs record their worst March in 19 years

Foreign portfolio investors (FPIs) recorded a net outflow from equity this March. At ₹61,972.75 crore, the outflow is the highest in the last 19 years, since 2002. There were just two other instances, in 2007 and 2008, when FPIs were net sellers to the tune of ₹1,802 crore and ₹130.4 crore respectively.

At aggregate level, including net investments in debt as well as hybrid instruments, this March with an outflow of ₹1,18,203.07 crore was the worst again, compared to 2008 and 2009 when the net outflow was ₹1,010.1 crore and ₹5,890 crore respectively.

During FY20, there were three months when FPIs registered net outflow from equity; July 2019 (-₹12,418.73 crore), August 2019 (-₹17,592.28 crore), and March 2020 (-₹61,972.75 crore). Together, the net outflow of these three months, at -₹91,983.76 crore, managed to wipe-off a substantial part of the inflows in the remaining 9 months which added to ₹98,136.02 crore. Thus, ending the year with a net inflow of ₹6,156.26 crore only, though much better than an outflow of ₹87.72 crore during FY19 – where 6 out of the twelve months saw outflows.

In terms of FPIs’ investments in debt, FY20 saw outflows in 6 out of the 12 months, wherein March 2020 recorded the highest outflow of ₹56,112.04 crore. In comparison, FY19 saw outflows in 7 of the 12 months. At the aggregate level, FY20 saw net outflow worth ₹41,379.06 crore compared to net outflow of ₹42,355.97 crore during FY19.

It is noteworthy that the debt investment figures for FY20 also include the net investments in debt through voluntary retention route (VRR) which was permitted in January this year. The net inflows from this avenue, between January and March this year stood at ₹7,331.17 crore. Upon excluding this VRR value, the net outflow in debt during FY20 stood at ₹48,719.2 crore, much higher than FY19’s outflow of ₹42,355.97 crore.

During FY20, from the perspective of S&P BSE Sensex and NSE’s Nifty 50, Indian equity markets registered a decline of 24.2% and 26.3% on the respective indices. Compared to the Sensex’s closing of 38,871.87 points, on April 1 last year, the closing value of 29,468.49 points on March 31 is a fall of over 9,403 points (-24.2%). Similarly, compared to Nifty 50’s closing of 11,669.15 points on April 1, the closing of 8,597.75 on March 31 is a reduction of over 3,071 points (-26.3%).

From the fiscal year’s high points – 42,063.93 in case of the Sensex and 12,384.45 points in case of Nifty 50 – on January 20 this year, the respective indices have corrected by over 12,595 points (-29.9%) and 3,787 points (-30.6%) respectively.

And, from the latest 52-week lows touched by the Sensex and the Nifty 50 on March 24, at March 31’s close the respective indices have recovered by over 3,829 points (+14.9%) and 1,086 points (+14.5%). This recovery has been seen in a matter of just 6 trading sessions, which seems fragile given the gloomy situation prevailing in the backdrop of the Covid-19 pandemic.

During FY20, the market capitalisation of the Sensex has seen an erosion of over ₹12.88 lakh crore (-18.6%), from ₹69.46 lakh crore on April 1 last year to ₹56.57 lakh crore on March 31. On the day the benchmark indices touched their life-highs, the Sensex also, on January 20, recorded its highest market capitalisation of ₹77.40 lakh crore. However, at the end of FY20, the Sensex’s market value stood eroded by 18.6%, or ₹20.83 lakh crore in absolute terms.

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