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Foreign institutional investors (FIIs) appear to have continued with their shopping spree in the March quarter, and have increased stake in two companies for every company they pared quarter-on-quarter. Of the 149 companies among the BSE-500 index that have disclosed their latest shareholding pattern, FIIs have hiked their stake in 99 companies and reduced in 47.
MFs reduce stake
Small retail investors increased their stake in 61 companies, but decreased stake in 86 firms. Interestingly, companies which attracted retail investor participation included beaten-down stocks such as Tulip Telecom, Elecon Engineering, Jai Corp, Jyoti Structures and Bombay Dyeing. Contrary to the above strategies, mutual funds have reduced stake in 87 companies (such as Madras Cements, Muthoot Finance and Amararaja Batteries) as against 42 companies (such as Elgi Equipment, Whirlpool of India and Sadbhav Engineering), in which they have increased their stake.
While promoters have reduced their stake in 28 companies, they have increased stake in 25. In most cases, promoters were forced to shed stake to meet the SEBI’s minimum public shareholding norm deadline of June. However, in some cases, such as Tulip Telecom, pledged shares by promoters have been offloaded in the open market by financiers.
According to market participants, while the FIIs have been sticking to large-cap stocks and adopting a steady accumulating strategy since December, retail players have increasingly deserted the market, after burning their fingers in the small- and mid–cap space, which has seen multiple crashes this year till March.
Shift in holdings
Kishor Ostwal, Head, CNI Research, said: “FIIs have been buying in large-caps such as the Nifty and Sensex stocks, but selling in B-group and penny stocks. Retail investors have been either going in for huge churn and profit-booking at regular intervals, or buying in beaten-down stocks. The February to March market behaviour though has given them a lot of pain, and driven them out of the market.”
According to Nitin Jain, Head, Capital Markets, Edelweiss Capital, the latest data on the shareholding pattern is reflective of the overall historical trend, of a shift from retail investors’ holdings to institutional holdings, and within institutional holdings towards FII holding in stocks.
“Within this shift, we find that institutional holding in the banking sector, particularly private banking, IT and pharma has seen an uptick,” he said.
However, Jain added: “FIIs are now realising it is better to invest in the US and Japan, than risk losing money in an underperforming market such as India. But, domestic institutions and retail investors are not participating at all, and have completely deserted the market leaving no counterbalance to the selling of FIIs.”
FIIs have invested Rs 45,529 crore in the March quarter in the secondary market, according to the SEBI Web site.
>badrinarayanan.ks@thehindu.co.in
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