Sensex companies benefited big time from foreign institutional investors (FIIs), led by exchange traded funds, or ETFs, last quarter.
Sensex companies benefited big time from foreign institutional investors (FIIs), led by exchange traded funds, or ETFs, last quarter.
Indeed, foreign holding in these companies increased significantly compared with the broader market. While the overall FII shareholding in BSE 200 stocks was up just two basis points at 15.85%, it was up 60 basis points for Sensex companies, at 19.71%.
Increased liquidity in global markets and attractive valuations of Indian equities helped draw money into the country, said Rikesh Parikh, vice-president - institutional equities, Motilal Oswal Securities.
Much of it came from investors who prefer passive funds, he said. “There was a substantial amount of money coming in from overseas HNI and retail customers through the ETF route.”
In fact, going by fund-flow tracker EPFR, as much as 65% of the net inflows last quarter came in through ETFs which seek to mimic the performance of the index by investing in the same shares as the index and in the same proportion.
A recent report by Kotak Institutional Equities said ETFs pumped in $1,139 million out of a total $1,778 million fund inflows into India.
Vikas Khemani, head - institutional equities at Edelweiss Securities, said FIIs have been buyers in beaten down stocks and interest-rate sensitives in expectation of a near-term reversal in the interest rate cycle. “A large part of the money would have come in through passive index and ETFs, which by default goes into Sensex and Nifty constituents.”
The Sensex gained 12.61% during the quarter.
Among its constituents, Maruti Suzuki saw the largest increase in foreign stake, going up from 2.1% to 21.45% over the last quarter.
FIIs also increased their stake in infrastructure and capital goods companies such as Tata Power, where they bought an additional 1.83% to raise their holding to 21.87%.
They also increased their holdings in Larsen & Toubro by 1.7% to 15.62% and in Bhel by 1.26% to 13.49%.
Domestic investors, meanwhile, were selling, according to experts.
Of the 19 Sensex companies that have disclosed shareholdings so far, domestic institutions decreased their stake in 14, while the FIIs increased their stake in 13.
In the BSE 200 pack, domestic institutions cut their stake in 59 of the 102 companies that have announced shareholdings so far, compared with 40 companies in which they raised stake. FIIs, on the other hand, raised their stake in 58 of the companies.
“While the markets were rallying, there was scepticism among many of the domestic institutional investors and they were selling the stocks during the run-up in the first two months of the calendar year,” said Khemani.
Interestingly, promoters too cut their stake in more companies than they increased it in the quarter — promoter stake was down in 29 companies compared with 15 in which it was up.
As for retail investors, their stake was down in 58 companies and
up in 42.
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