Maintaining a bullish stance on Indian equities, foreign investors have increased their exposure in Sensex companies to an all-time high of 27 per cent in the September quarter.
According to the Bank of America Merrill Lynch report, strong inflows from FIIs over the last five years have resulted in all-time high foreign ownership for the Indian markets.
“FII stake in Sensex companies has been rising continuously since 2009,” the global financial services major said in a research note, adding the FII stake stood at an all-time peak of 27 per cent as of September 30.
FIIs continued to invest in India in the September quarter albeit at a slower pace. Moreover, this was the eighth consecutive quarter of positive inflows from FIIs.
As of June 2014, FIIs collectively held around 22.5 per cent of the market and around 46 per cent of the free float. In comparison, FIIs held around 15 per cent of the total market cap and 36 per cent of free float in March 2009.
Overweight, underweight sectors
A sector-wise analysis shows that financials continue to remain the highest overweight sector for FIIs, while software and energy are the biggest underweight sectors.
“We are positive on energy sector reforms and believe positive progress on it could lead to FII buying in PSU oil companies,” the report added.
Most bought sectors by FIIs were consumer, telecom, software and financials. On the other hand, most sold sectors by FIIs were industrials, cement and metals.