Nilanjan Dey

Kolkata, Feb. 14

FOREIGN holding in Sensex companies is still growing. Figures pertaining to the end of the last quarter clearly indicate that the shareholding of foreigners, at 29.2 per cent, has increased at the cost of promoters. The latter's holding has decreased from 51.5 per cent to 49.7 per cent between December 2004 and December 2005.

The numbers, bandied about for some time now, assume added significance in the light of the index powering ahead of the 10,000-mark, indicating fresh buying and raising hopes that foreign investments will continue to come in during this quarter as well, say market circles tracking the trend.

The Sensex companies in which foreign holding grew the most during the period included Infosys, Tata Steel and HDFC Bank; the increase in these cases were 8.2 per cent, 6.37 per cent and 4.35 per cent, respectively. On the other hand, the three companies in which foreign holding declined the most were Grasim (a drop of 3.46 per cent), ACC (1.14 per cent) and Ranbaxy (2.44 per cent), figures released by Capital Line indicate.

As things stood in end-December, the combined holding by promoters amounted to 49.7 per cent, down from 51.5 per cent recorded one year ago. Holdings by the Government, institutions and the public - at 1.7 per cent, 9.2 per cent and 10.2 per cent - showed marginal changes. Foreign holding on the other hand went up 2.4 per cent.

The trend, investment professionals say, points towards a sustained interest displayed by overseas investors in frontline stocks. The 30-share BSE index, feels Mr Nilesh Shah, President, Kotak Mahindra MF, only represents the broad market and "one can find many other cases where foreigners have lately added to their stakes in prominent, quality companies". This, after so much foreign investment has already moved into the country in recent times.

`Foreign', it may be mentioned, is being used here as an inclusive term, covering entities such as FIIs, OCBs and foreign governments. Their involvement in the Indian market has come at the cost of local promoting groups.

According to Mr Raamdeo Agrawal, Managing Director, Motilal Oswal Securities, the coming together of a number of positive factors may well attract more money from overseas participants. "But even if there is a reversal of the trend and the index goes down, say by 15 per cent, a large number of stocks may still do well".

(This article was published in the Business Line print edition dated February 15, 2006)
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