Foreign institutional investors (FIIs) which hold more than a fifth of stakes in India Inc have increased their shareholding to record highs during the June quarter.
On the other hand, domestic institutions saw their holdings reduce to 14-quarter lows. An analysis of the shareholding pattern of 215 of the BSE-500 companies that have declared their June-end shareholding pattern so far shows that foreign investors have increased their stake in 120 of them while reducing in 85.
As a result, their aggregate stake in 215 companies has now inched up to historic highs of 14.29% from 14.04% in March quarter.
Foreign investors were aggressive buyers in most of the pharmaceutical companies like AstraZeneca Pharma, Ipca Laboratories, Biocon, Lupin, Glenmark Pharmaceuticals, Aurobindo Pharma and Divi’s Lab.
On the other hand, they pared stake in automobiles (Hero Honda, Maruti Suzuki and Bajaj Auto) and infrastructure firms.
Jitendra Panda, head of broking at Capital First Securities, said pharmaceutical companies have been drawing huge interest among investors because of tremendous export potential these companies have by tapping developed and other emerging markets. “The pharmaceutical sector has been growing steadily and last quarter saw most of the companies in this sector hitting new highs.
While the last month saw selling by FIIs, they were mostly hedge funds and short-term investors. The long-term foreign investors are holding on and in fact buying into quality midcap stocks which would have resulted in their stake increasing,” he said.
Domestic institutions faced with redemption pressures for most of the June quarter reduced their stakes in 121 firms, while increasing in 81. Their aggregate holding in 215 of the BSE 500 companies has dipped by 9 basis points over previous quarter to 8.69%. Stocks such as Icra, Ess Dee Aluminium, United Phosphorus, Sadbhav Engineering and Rain Commodities saw the biggest fall in domestic institutional holding.
Among the other category of shareholders, promoter shareholding came done as expected during the quarter due to Sebi’s minimum 25% public shareholding norms. They now hold nearly 55.32% in BSE 500 firms that have reported their shareholding.
The quarter saw promoters of AstraZeneca Pharma paring their stake by 15%, MMTC by 9.33% and Jet Airways by 5%.
The aggregate stake of retail investors too decreased by 27 bps in June quarter to 13.26%.
Going ahead, experts believe that FIIs would continue to dominate the Indian markets, given the improving macro fundamentals.
“With macro-economic factors stabilising, currency near to its bottom and risk apetite returning over last few days, the FIIs see a window of opportunity. The sectors like IT, banks and energy may see higher interest,” said Panda.
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