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Tania Kishore Jaleel

Mumbai, Sept. 17 Indian companies in which FIIs’ shareholdings are substantial are likely to come under more selling pressure on the bourses, marketmen believe.

Many financial majors that are in crisis overseas would get their FII units in India to sell whatever they have so that they can send funds back home, said Mr V.K. Sharma, Whole-Time Director and Head of Research, Anagram Securities. “You will see a lot of selling in the next few days to come and this would not have anything to do with the fundamentals of the companies,” said Mr Sharma.

Over the last week, the Sensex dipped close to 10 per cent. During this period, the FIIs’ net sales in equities were Rs 7,172 crore.

FIIs hold 22 per cent stake in Sensex companies as on June 30, and their portfolios were “skewed towards banking and financial services, oil and gas, and IT services companies”, an Enam Securities report says.

Analysts say that the more the FII shareholding in a company, the higher the selling pressure will be on that scrip.

. ICICI Bank has FII holding of 38.85 per cent, HDFC Bank 28 per cent, Infosys 34 per cent and Satyam Computer holding stood at 47.65 per cent.

“You can expect a lot more selling in banking scrips now that the FIIs would want to exit their positions. During the bull run, many of the FIIs increased their holdings in IT and banking companies. Usually when the stocks are under priced, you will see the FIIs buying them, and once they feel that these scrips are over their intrinsic value the selling will start. The trick is to start selling before the FIIs,” said Mr Alex Mathew, Head of Research, Geojit Financial Services.

However, the current situation is more to do with FIIs’ pressure from overseas than whether a scrip has peaked or not, said analysts. The BSE IT index has fallen more than 12 per cent and BSE Bankex has shed 10 per cent in the last week.

The other companies that have a substantial FII holding include HDFC, which has FII holding of 59.09 per cent; Bharti Airtel, which has 23.63 per cent; Grasim, which has 21 per cent; M&M, which has 24 per cent; Zee Entertainment Enterprises Ltd, which has 26.03 per cent, and Hero Honda, which has 24.25 per cent. “One of the foreign financial services firms has reported that it would reduce investments in BRIC, which would mean we can expect more selling by them,” said Mr Mathew.

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