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Foreign institutional investors’ ownership in NSE-listed companies plunged to nine-year low in the December quarter, even while retail holding increased to a 14-year high. FII’s ownership fell for the fourth consecutive quarter in December by 0.81 per cent to a nine-year low of 19.7 per cent in the NSE companies and 65 bps to 20.9 per cent in Nifty-500 companies, according to a report from the NSE.
In fact, foreign institutions’ holding last year dipped by 2.04 per cent and 1.65 per cent in NSE-listed companies and Nifty-500 respectively. The fall in ownership can be partly attributed to huge foreign capital outflows during the quarter due to resurgence of Covid, rising inflation concern, expectations of faster-than-anticipated rate by US Fed and economic slowdown in China.
New investors on the rise
With most of the FII investment concentrated in top companies, individual retail investors’ holding in Nifty 50, Nifty 500 and NSE-listed companies moved up by 0.21 per cent, 0.29 per cent and 0.36 per cent to 8.3 per cent, 9 per cent and 9.7 per cent in Nifty 50, Nifty 500 and NSE-listed companies in the December quarter.
Retail participation in Indian equities has jumped manifold over the last two years with new investor registrations and a sharp jump in the share of individual investors in the cash market turnover. Consequently, retail share in the NSE-listed space has risen by 1.30 per cent since December 2019.
SIP boosts MFs holding
Aided by sharp surge in SIP inflows, domestic mutual funds share, their stake in the NSE-listed universe inched up for the second quarter in a row by 0.11 per cent to 7.4 per cent in the December quarter.
With this, mutual funds’ share is now just 0.46 per cent short of the peak share of 7.9 per cent logged in March, 2020.
FIIs bet on small cos
Notwithstanding the massive sell-off in the later part of last year, FIIs have surprisingly raised their exposure to smaller companies by widening their invested pool of stocks by adding over 260 new companies.
At the same time, the number of companies where they have over 5 per cent holding remained steady at the 600-odd mark. This points to the fact that the incremental flows had gone into mid- and small-cap stocks.
On the other hand, mutual funds had benefited from a surge in SIP inflows over the last few quarters, leading to higher market ownership even as their portfolio was incrementally more concentrated in larger companies.
This was reflected by the drop in their holding ex-Nifty 500 companies in the December quarter.
Mutual funds had pumped in net ₹34,900 crore, the highest in the last seven quarters.
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