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March 2020 quarter shareholding data reveal the complete aversion of foreign institutional investors (FIIs) to Indian stocks. FIIs have reduced their stake in 90 per cent of Nifty 50 stocks, which are widely considered safe bets, on a quarter-on-quarter basis, a study by Motilal Oswal Institutional Equities has said. Further, they reduced ownership in 67 per cent of Nifty 500 companies during the March quarter, it further said.
Bharti Airtel and Zee Entertainment Enterprises witnessed a QoQ increase in FII holding, while Eicher Motors, Axis Bank, Tata Steel, ICICI Bank and Grasim Industries were the top stocks to see a decline in FII holding.
FIIs holding in Nifty 500 companies has hit a five-year low, declining 140 basis points (bps) QoQ to 21 per cent at the end of the March quarter.
On the other hand, domestic institutional investors (DII) holding in the Nifty 500 were up 20 bps QoQ to 14.8 per cent, the domestic brokerage said, adding that they had increased the stake in 61 per cent of Nifty 500 and 78 per cent of Nifty 50 companies during the March quarter.
Notably, in the March quarter, DII inflows (at $10.1 billion) and FIIs outflows (at $6.6 billion) were at record highs, Motilal Oswal Institutional Equities said.
FII-DII ownership ratio
“Over the last five years, the incremental dominance of domestic capital savings has gone up with consistent and rising SIP investments along with a shift toward financial savings. Consequently, the FII-DII ownership ratio in the Nifty 500 is at a new low and has declined to 1.4x from 2.2x in the last five years,” it added.
Over the past year, an increase in the FII-DII ratio was recorded in the insurance sector while telecom, real estate, private banks, cement, healthcare, automobiles, retail and technology have seen a decline.
The most increase in DII holdings in Nifty stocks was seen in Power Grid, Eicher Motors, NTPC, Coal India and ONGC.
Sequentially, FIIs have increased their stake in telecom (+190 bps), NBFCs (+110 bps), insurance (+50 bps), retail (+30 bps), utilities (+ 20 bps) and oil and gas (+10 bps). In contrast, metals (-200 bps), autos (-150bp), capital goods (-140bp), private banks (-120 bpd), healthcare (-110 bps) and cement (-110 bps) have seen a reduction in FII stake.
DIIs increased their stake in telecom (+220 bps), utilities (+190 bps), metals (+110 bps), NBFCs (+100 bps) and private banks (80 bps). Consumer was the only sector where they reduced their stake, by 110 bps.
Promoters took advantage of the sharp correction as a result of the pandemic, and raised their ownership in Nifty 500 companies by 130 bps QoQ to 50.5 per cent.
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