Foreign Investors Returns Towards Indian Market

Foreign Institution Investors (FII) were leaving the Indian market for a long time and this month witnessed a change in that pattern for the first time within a decade according to a report released by Bank of America ( BofA) Securities has disclosed. FII inflows increased at $130 million for only the second time since the beginning of September in 2021. "With the inflows increasing this month, it may suggest that the market is at its lowest," the investment bank stated. But, it was not enough to put an optimistic spin on the amount foreign investors have already pulled of this Indian market. 

India has seen an outflow of $29 billion since the beginning of the year. The country ranks second in the overall outflows trend, just behind Taiwan. The rise in inflows may result in a rise in the level of ownership to a certain extent. FII ownership levels were below the lows of Covid-19, which were 19.0 percent at the time of June 2022 according to the data provided in the report of NSE500 companies.
 

Although the inflows out of FIIs increased however, the flow of Domestic Institutional Investors (DII) has slowed down by $3.4 billion. Both active and passive funds experienced a moderated rate of $1.6 billion, and $1.8 billion in the respective years. Total inflows were $26 billion between January and June of this year.

"Within DIIs, arbitrage funds experienced outflows of (-$$354mn in comparison to 65 million in May 22) however, inflows were also seen in other type funds on a MoM basis." BofA added.

In the overall picture, the total asset under management (AUM) of foreign investors was $523 billion while that of domestic investors were at $256 billion. The total IPO funds raised stood at $5.34 billion in the year up to date this year, which is a low figure due to the market's high volatility during the quarter and macro headwinds. "Despite this, the IPO funding for CY22 stood with $7.7billion," the investment bank reported.