The share of such funds in the total overall FPI equity portfolio reached a record high of 25% in October 2023, data from NSDL showed. This would mean 10% of the free float market capital is held by sticky funds domiciled overseas. Last month’s reading of the sticky funds is about 150 basis points higher than the long-term average for this class of investors.
A rising share of sticky funds is an indication that redemption pressure on Indian equities would be relatively lower during the period of extreme risk aversion as sticky funds’ outlook on India continues to remain favourable.
The equity AUM of sticky funds stood at ₹13 lakh crore at the end of October 2023. This is equivalent to nearly half of the total domestic fund equity AUM.
The rising share of sticky funds in the total FPI equity portfolio has been mainly driven by the expanding pie of sovereign wealth funds (SWF) as they continue to invest in Indian companies through the primary market.
The share of SWFs rose to 6.8% in October 2023 – a multi-year high level. This share has been steadily growing since November 2021, when it hit a low of 5.8%. Assets under management of SWFs climbed 16% on a year-on-year basis to ₹3.56 lakh crore at the end of October 2023, while the total FPI equity portfolio grew 9% in the same duration.
