The September quarter witnessed alternate bouts of buying and selling by foreign institutional investors and small retail investors. The number of companies that saw stake increases by FIIs and retail investors almost matched the number that saw stake decreases.

So far, about 180 companies of BSE-500 index have disclosed their shareholding pattern to the exchanges. FIIs have increased their holding in 77 companies and decreased their holding in 73. Similarly small retail investors — having shares valued up to Rs 1 lakh — have hiked their stake in 85 companies and decreased the holding in 84.

Promoters remained calm in 114 companies. While 27 saw their holding going up, 37 companies witnessed a fall in promoter stake.

Pares and picks

Educomp Solutions (-5.72 per cent), BEML (-4.1 per cent), Alok Ind (-3.7 per cent), (Axis Bank (-3.5 per cent) and Deccan Chronicle holdings (-2.7 per cent), were the top five scrips in which FIIs pared their stake the most during the previous quarter.

On the other hand, their top five picks were Apollo Hospital, Gujarat Pipavav Port, Hexaware Technologies, Indraprashta Gas and Lupin.

Small investors top pick include Educomp, Bajaj Hindustan, Mercator Lines, Rain Commodities and JB Chem & Pharma.

According to a recent study by Morgan Stanley (September 15), “contrary to popular belief, investing (vs speculating) has not been abandoned.

Indeed, the holding period of all market participants on aggregate has doubled in the last two years. “Investors are now holding stocks for an average of nearly three years. The shift of speculative trading from the cash market to the derivatives' market has helped.”

FIIs sellers, DIIs buyers

FIIs have sold Rs 723.71 crore worth of equity in October and Rs 20,258 crore worth equity in the net since January 1.

“FIIs have been net sellers of equity on Indian bourses in five out of the nine months of 2011; they have also been net sellers in October,” said the Head of Research of an Indian brokerage.

“In the previous bull market, FIIs bought stocks but reduced holding periods as the bull market matured.

“In the past three years, FII ownership has deepened and lengthened,” Morgan Stanley said.

Experts attribute the FII selling to the uncertain economic situation in the US and Eurozone. “This was bound to happen as investors went short on almost all asset classes barring gold, the safe haven, during times of uncertainty such as the one prevailing now,” said a CIO of a foreign mutual fund.

On the other hand, DIIs bought Rs 900 crore worth equity in the net in October and were net buyers to the tune of Rs 25,240 crore since January 1.

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