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It was a black Tuesday for Indian equities, as the country’s benchmark indices — Sensex and Nifty— nosedived over 3 per cent in trade. The sell-off was broad-based with 474 stocks out of the CNX 500 Index declining. Two-third of the stocks that fell were those in which FII holding (as of September 2014) was higher than the year-ago period.
Realty worst hitAmong those that fell the most were real estate stocks, which were FII favourites in 2014. DB Realty plummeted 8.7 per cent. Foreign institutions had upped their stake in this company from 5.79 per cent in September 2013 to 9.11 per cent as of September 2014.
Likewise, the stock of Indiabulls Real Estate, which saw buying interest from FIIs in 2014, fell over 7 per cent. As of September 2014, foreign institutions held 28.93 per cent stake in the company, 3.2 percentage points more than in September 2013. Other realty stocks which were bought by FIIs in 2014 and figured prominently in the losers’ list include HDIL and Anant Raj Industries. Both stocks lost in excess of 6 per cent on Tuesday.
There were big losers in other sectors, too. The stock of garment manufacturer Arvind, in which FIIs had raised stake to 23.5 per cent by end-September 2014, from 15.7 per cent in September 2013, lost 6.7 per cent.
Likewise, the stock of J Kumar Infra Projects, wherein the FII holding almost trebled to 17.9 per cent as of September 2014 from 6.17 per cent in September 2013, lost 6.5 per cent.
Other FII-favoured stocks that gave up gains include BF Utilities (6.6 per cent), Tata Sponge Iron (6.2 per cent), Hotel Leela Ventures (6 per cent) and Bharat Forge (5.7 per cent).
Vulnerable to trendsThe free fall in crude oil and subsequent strain on oil-based economies not only poses a risk to incremental FII flows into India but can also trigger profit-booking by foreign institutions. The stocks of companies that are heavily owned by FIIs may be more vulnerable to negative global developments.
Which are they? HDFC tops the list; FIIs held 77.85 per cent in the company as of September 2014. FIIs owned more than half of Zee Entertainment’s equity. Other companies in which FIIs had more than 45 per cent of the total equity include Shriram Transport, IDFC, Hubtown, Axis Bank, United Phosphorous, YES Bank and KPIT Technologies.
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