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Even as foreign portfolio investors (FPIs) stayed away from the secondary market for the entire second half of FY22, they maintained their investment interest in the Indian primary market on account of a slew of initial public offerings (IPOs) that hit the capital markets, the Reserve Bank of India, said, in its annual report.
“In terms of the investment route of FPIs in the equity market, the stock exchange channel recorded a significant decline during 2021-22. However, FPIs maintained their investment interest in the primary market segment,” RBI said.
“In fact, a large chunk of flows was diverted by FPIs from secondary to primary market during November-December period when big ticketIPO issues hit the capital market,” it added.
FPOs, rights issues
According to the report, resource mobilisation through the primary segment increased by 26.1 per cent to ₹1.39-lakh crore in FY22 as against ₹1.1-lakh crore during the previous year. The primary market segment includes IPOs, follow-on public offers (FPOs) and rights issues.
Of the total primary market fundraising, ₹1.13-lakh crore was mobilised through 121 IPO/FPO issues, out of which 70 issues amounting to ₹958 crore were listed on the small and medium enterprises (SMEs) platform of the BSE and the NSE.
However, resource mobilisation through rights issues decreased to ₹26,327 crore during 2021-22 as compared to ₹64,059 crore during the previous year. Similarly, fund mobilisation through preferential allotment and qualified institutional placement (QIP) also decreased to ₹92,135 crore (₹1,19,678 crore) during the comparable period.
FPIs were net sellers in the Indian capital market in nine out of 12 months of FY22 marking a record outflow of ₹1.40-lakh crore from equities after making a record net investment of ₹2.74-lakh crore in the previous fiscal.
“The domestic equity market remained undeterred by tapering announcements by the US Fed in the first week of November 2021. Notwithstanding this positive start, however, the equities registered sharp declines towards the end of the month, triggered by the reports of detection of Omicron and imposition of fresh rounds of travel restrictions across various parts of the globe,” RBI said in its annual report.
“The downtrend deepened in the first half of December 2021 as FPIs continued to offload Indian equities and monetary tightening in Advanced Economies (AEs) seemed imminent,” it added.
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