73 percent of foreign institutional investor (FIIs) outflows in the June quarter of FY23 (Q1FY23) was driven just by five sectors, domestic brokerage house Motilal Oswal stated in an analysis of the sectoral trends of FIIs for the June quarter.
According to MOSL analysis, FII outflows in Nifty500 stood at $16.8 billion in the first quarter of FY23.
The report further pointed out that the sector that recorded the highest outflows was Technology at $4.2 billion in Q1FY23. Private Banks were the second sector with the highest FII outflows in Q1 at $3.8 billion. It was followed by NBFC space, where FII outflows in Q1 stood at $2.5 billion, Oil & Gas, where FIIs outflows were seen at $1 billion and finally Metals with FII outflows worth $0.8 billion in Q1, the brokerage informed.
According to Motilal Oswal, Healthcare was the only sector to report nominal inflows in the June quarter at $0.1 billion.
Over the past few quarters, Technology, Private Banks, and NBFCs continued to see steady outflows, while, Metals and Utilities that recorded inflows in Q4FY22 and saw outflows in Q1FY23, noted the brokerage.
The brokerage also highlighted that during the last three quarters, FIIs recorded cumulative outflows of $44 billion from Nifty500; of this, Private Banks topped with $11.3 billion, followed by Technology at $9.6 billion, and NBFCs at $6.5 billion, it added.
Anatomy of FII holdings
Nifty50 stocks form 70 percent of total FII holdings in India while Nifty500 accounts for 98 percent share, the report said.
As of June 2022 and on a sectoral basis, Private Banks accounted for 20.1 percent of the $578 billion market value of FII holdings. Market value FII holdings in private banks stood at $116 billion, noted MOSL.
Oil & Gas was the second top holding of FIIs in Q1 with a 13.1 percent weightage and market value of FII holding at $76 billion. Reliance holds 78.3 percent weightage of total oil and gas holdings of FIIs, it added.
The oil and gas space is followed by Technology with 11.7 percent weightage in FII holdings at $67 billion. Meanwhile, Consumer and Automobiles accounted for 7.3 percent, and 5.7 percent of holdings, respectively, informed the brokerage.
Including NBFCs, at 10.3 percent weightage, Insurance (1.9 percent) and PSU Banks (1.2 percent - with SBI at 1 percent), Financials formed 33.6 percent of FII holdings in India, the brokerage stated.
Cumulatively, these five sectors – BFSI, O&G, IT, Consumer, and Auto – contributed 71.4 percent to the total FII holdings in India, it added.
Top-10 stocks form 46 percent of total FII holdings:
From a top-down perspective, FII holdings seem concentrated – the top-25 stocks account for 62 percent of total India holdings with the top-10 stocks alone accounting for 46 percent, said the brokerage. In fact, the HDFC twins – HDFC Bank and HDFC Ltd – the top two FII positions in India, form 13.5 percent of total FII holdings in terms of market value, it noted.
The rest eight stocks in the top-10 holdings are Reliance Industries, ICICI Bank, Infosys, TCS, Kotak Mahindra Bank, Axis Bank, Bharti Airtel and HUL, added the brokerage.
Market value
"At a cumulative investment of $191 billion, the total market value of FII holdings in India stood at $578 billion as of June 2022. The ratio of the total market value of FII holdings to cumulative investments of FIIs in India stands at 3x with a bottom of 1.8x in FY13 and a peak of 3.4x in FY22. The peak market value of FII holdings stood at $677 billion in FY22," said the brokerage.
Over FY12-22, the market value of FII holdings has clocked a CAGR of 11.5 percent in dollar terms and 16.5 percent in rupee terms, it further informed.
