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Published: Jan 10, 2023
Updated: Jan 10, 2023

FPIs Flee Indian IT Stock Markets in 2022 as Recession Fears Persist

FPIs Dump Indian IT Stocks Worth INR 72,000 crore in 2022

Overseas fund managers have been steadily reducing their investments in Indian IT stocks since the beginning of last year due to concerns over a potential recession and decreased technology spending in the US and Europe. Data compiled by Primeinfobase.com shows that foreign portfolio investors (FPIs) cut their exposure to the IT sector from 15.43% in December 2021 to 10.45% in December 2022, after selling shares in companies such as Infosys, TCS, and Wipro worth INR 72,000 crore. In contrast, FPIs increased their investments in the metals, mining, construction, and oil & gas sectors during the same period.

Let’s have a look on the Sectoral Performance of indices in 2022:

In 2022, foreign portfolio investors (FPIs) significantly reduced their investments in the Indian IT sector due to concerns over a potential recession and decreased technology spending in the US and Europe.

As a result, the Nifty IT index saw a 25% drop in value compared to the previous year. In contrast, FPIs increased their investments in the metals, mining, construction, and oil & gas sectors during the same period. This can be attributed to the stronger performance of these sectors, which likely offered more attractive investment opportunities.

The allocation of FPI investment in the auto and auto ancillary sectors also saw a notable increase, going from 4.07% in 2021 to 5.35% in 2022.

However, the capital goods and textiles sectors underperformed in 2021 and saw a decrease in FPI investment as a result. It is important to keep an eye on these sectoral trends and their impact on the Indian economy in the coming year.

Recession fears made FPI’s allocate funds elsewhere

The reduction in FPI investment in the IT sector can be attributed to concerns over a potential recession and decreased technology spending. These trends will be worth monitoring in the coming year to understand their impact on the Indian economy.Understanding the factors driving FPI investment decisions can provide insight into the overall economic health of the country and inform investment strategies.