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Concerns over high inflation in India, coupled with some recovery in the global markets, seems to have prompted the foreign fund houses to reduce their exposure in banking stocks such as ICICI Bank, HDFC Bank and SBI, among others, in the domestic market at the end of March quarter.
A study of the banking index, which comprises 14 stocks, says foreign institutional investors (FII) reduced their shareholding in 11 banks, while increasing in the remaining three at March-end.
“The FIIs reduce their stakes in banking stocks due to rising inflation along with a marginal recovery in the global market,” Global Securities Strategist & Head of Research, Mr Jagannadham Thunuguntla said.
Indusind Bank saw the maximum decline in FII holding. FII stake in it went down to 34.78 per cent at the end of March quarter, down 2.15 per cent from December-end.
Concerned over high inflation, the Reserve Bank through its monetary policy is likely to prompt the lenders to hike interest rates which could impact banks’ bottom lines, analysts said.
The FIIs cut stake in ICICI Bank by 0.61 per cent to 38.62 per cent and in HDFC Bank by 0.84 per cent to 28.53 per cent.
In State Bank of India, they holding came down by 0.56 per cent to 12.80 per cent
In Bank of India, their holding came down by 0.92 per cent.
The FIIs reduced exposure in Federal Bank by 2.2 per cent, in Union Bank by 1.75 per cent, Bank of Baroda by 1.63 per cent and IDBI Bank by 1.46 per cent at March-end.
Interestingly, the FII hold maximum stake in Yes Bank, which is 45.54 per cent and the minimum in IDBI Bank that is 3.88 per cent.
As far as PSU banks are concerned, the FIIs reduced their stake as mounting pension liabilities of state-run banks was a concern, Mr Thunuguntla added.
Apart from the 14-banks which comes under banking indices, FII have offloaded stake in Punjab & Sind Bank, Bank of Maharashtra, Indian Overseas Bank, Syndicate Bank and Allahabad Bank.
The FII holding went in Axis Bank by 1.12 per cent to 37.68 per cent, Canara Bank (1.46 per cent to 14.93 per cent) and Kotak Mahindra Bank (1.41 per cent to 25.4 per cent).
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