Twitter
Advertisement

Shareholding algo changing

Foreign and local institutional investors, along with promoters, retail and high net worth individuals, have rejigged their positions in the quarter just gone by.

Latest News
article-main
FacebookTwitterWhatsappLinkedin

Foreign and local institutional investors, along with promoters, retail and high net worth individuals, have rejigged their positions in the quarter just gone by. FIIs in particular have been aggressive of all. Nitin Shrivastava, Sachin P Mampatta and Kishor Kadam track their Q2 moves

Looks like shareholders are busy reworking their math. Irrespective of the hues, each investor class has made a U-turn on Indian companies in the three months ended September. If they cut down their holding in June quarter, they upped it in the next and vice-versa, according to a DNA Money analysis of 134 companies from the BSE 500 that have announced their shareholding pattern.

Foreign institutional investors (FIIs) are a case in point, who scaled down their holding by 26 basis points (bps) in April-June and pumped it up by 16 bps in July-September, with an average of 13.91% in these companies. A hundred basis point is one percentage point. FIIs have been net buyers by `41,699.5 crore during the quarter and over twice that amount since January. In September quarter alone, their exposure was down in 58 companies whereas it went up in 71.

Domestic institutional investors (DII), which largely include mutual funds and insurance companies, on the other hand pared their stake by a solitary basis point after having raised it by 6 basis points in the earlier quarter. They now hold an average of 9.74% in these companies.

Shareholding data from companies who are yet to declare the same, may show further slide in DII holdings since they have been widely seen to be sellers in recent months. PVK Mohan, head, equity, Principal Pnb Asset Management Company, said domestic institutions have been facing pressure because of exiting investors. “There has been some redemption pressure for mutual funds. Insurance companies may be selling to participate in the proposed divestment push. They typically counterbalance the market inflows,” he said.

Sandeep Nanda, chief investment officer at Bharti AXA Life Insurance, attributed the selling to a sense of scepticism towards government’s recent efforts and a sharp rebound in markets towards the latter part of quarter. “There was some sort of disbelief and pessimism whether reforms will last and on the stability of the government among people. Also, some of the risk-averse investors would have sold off shares or units on seeing index hitting previous highs. Though we have remained fully invested, there would be some insurance companies which would have sold shares to raise cash levels in order to participate in the upcoming PSU divestment programme,” he reasoned.
A Morgan Stanley India Strategy report dated October 8, 2012, did confirm that outflows have been the worst in recent years. “Outflows from equity funds persisted (for the fourth month in a row) and swelled to Rs 3,600 crore, their worst levels in two years,” read the report authored by Sheela Rathi, Ridham Desai, Amruta Pabalkar and Utkarsh Khandelwal.
Meanwhile, promoters who had raised their average stake by 7 bps in April-June cut it by 9 bps to 55.16% in the following quarter. Though three months are hardly a period of massive swings in promoter shareholding, this time around there were as many as 33 companies that were in the thick of things. There were more than 2 sellers for every buyer among promoters, who stepped up their exposure in 10 companies and toned it down in 23.

A fund manager put it in a different way. He suggested that promoter selling could be due to an approaching 2013 deadline to increase public shareholding to 25% for private companies and 10% for government ones. Also, public shareholding, which includes retail and high net worth clients, was down to 11.81% from 11.83%. It had gone up by 20 basis points in the previous quarter.

Mehraboon Jamshed Irani, principal and head - Priority Client Group at Nirmal Bang Securities, sounded a bit more sanguine. He said even as FIIs were aggressive buyers, there was a drastic change in sentiment of HNI clients as well during last month. “FIIs were buyers even before the reforms started... Even among domestic clients, the HNI sentiment seems to have improved a lot as I was able to garner much more money in September alone than I did over the last six months,” he said.

Irani is hopeful that retail investors would flock to markets this quarter in hordes as they have missed out on the opportunity before and are likely to buy on every decline. The BSE Sensex, an index of 30 companies whose movements are said to be the barometer of the overall market, was up 1332.76 points or 7.65% during the quarter. It closed at 18675.18 on Friday.
 

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement