In 2010, Indian stock markets registered inflows of Rs1,40,000 crore by foreign institutional investors, far ahead of what they had drawn in 2009 when the amount was Rs85,000 crore.
In 2010, Indian stock markets registered inflows of Rs1,40,000 crore by foreign institutional investors (FIIs), far ahead of what they had drawn in 2009 when the amount was Rs85,000 crore. Not to be left behind, some Gujarat-based companies took advantage of the whopping inflow of FII investment.
Among the prominent Gujarat-based companies which saw a rise in FII holdings are Ratnamani Metals, Zydus Wellness, Arvind, Kalpataru Power, Kiri Dyes and Torrent Pharma.
Though there was a rise in FII inflow in 2009 as compared to 2008, Gujarat Inc had seen FIIs withdrawing their stake in 2009.
But in 2010, the trend reversed. FIIs, which were labelled as safe players by experts in 2009, regained their faith in Gujarat-based scrips in 2010.
In the case of Ratnamani Metals, FII holding increased by 778% in 2010. The FII holdings in the company increased to 9.66% (of the total equity share) in December 2010 as compared to 1.1% in December 2009.
Garden Silk registered 389% increase in holding, keeping the second slot on the list. Among the others, Zydus, Arvind and Kalpataru Power saw a rise of 230%, 208% and 126% respectively in December 2010 as compared to December 2009.
Experts termed the state’s growth as the major reason for the increase in FII holding in these companies. Nilesh Kotak, MD of Dhanvarsha Fincap Pvt Ltd, said: “As the GDP growth of Gujarat has exceeded that of other states, the confidence level of FIIs in Gujarat companies has increased. Also, the consistently good performance shown by a majority of companies in the state year-on-year has been instrumental for increase in FII holdings.”
Even state PSUs have not been left behind. Five of six listed Gujarat PSUs saw an increase in FII holdings in 2010 as compared to 2009. With GMDC taking the lead registering an 80% growth, GSFC followed with 58% rise.
The FII holding in GSFC rose to 8.06% in 2010 from 5.11% in 2009.
GSPL is the only PSU which saw the FII holding fall to 11.34% in 2010 from 13.67% in 2009. However, on the other hand, companies like Dishman Pharma, Riddhi Siddhi Gluco Biols and Bhagwati Banquets experienced a fall of 21%, 32% and 83% respectively. Experts cite various reasons behind the fall.
Ketan Marwadi, MD of Marwadi Stock Broking Ltd, said: “The support that the companies here have received from the state government has helped them grow. But, besides infrastructure, the fundamentals and promoters of the company also matter.”
Moreover, some FIIs also sold their share to book profit, leading to decrease in their holdings in Gujarat-based companies. There, the fundamentals of the company played a major role in the FII holdings.
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