Promoters exit, FPIs & MFs step in

In the march from 25,000 to 50,000 that spanned over 6 years beginning June 2014, foreign portfolio investors (FPIs) and domestic mutual funds have taken a liking to Sensex stocks, even as promoters cashed in, reveals a study of the shareholding pattern of Sensex companies in this time period. Bank and NBFCs stocks as well as those from the energy space have been their preferred picks.

Total non-promoter holding (including foreign and domestic institutions, HNI and retail investors) in the index companies has increased from 49.2 per cent to 57.2 per cent during this period (54.5 per cent in September 2020), driven by FPIs and mutual funds.

Promoters have offloaded their stake, resulting in holdings coming down from 46.4 per cent in June 2014 by 39.8 per cent in December 2020 (42.7 per cent in September 2020).

Only 20 of the 30 Sensex companies have revealed their latest shareholding pattern as of December 2020.

What FPIs picked

While FPIs held about 22.3 per cent in Sensex stocks when the index touched 25,000 levels in June 2014, it now stands at 28 per cent (24.7 per cent as of September 2020).

A point to point comparison shows that FPIs have favoured stocks such as Reliance Industries, NTPC and Axis Bank in this period.

While the Sensex constituents have changes about 10 times since 2014, these stocks are among those companies that remained part of the index during this period.

MFs add, insurers shed

Among the domestic institutional investors (DIIs), while mutual funds upped their stake in Sensex stocks, insurance companies shied away.

Shareholding of mutual funds have gone up from 3.4 per cent in June 2014 to 8.5 per cent in December 2020 (8.2 per cent in September 2020). Like FPIs, mutual funds also found good bets in NTPC and Axis Bank.

The stake increase was the highest during the said period in the stock of NTPC - up from 0.6 per cent to 18.4 per cent. This apart, mutual funds’ stake in ICICI Bank was increased from 8.2 per cent to 22.2 per cent.

But unlike FPIs and mutual funds, insurers offloaded stake in Axis Bank. Shedding also took place in SBI and HDFC Bank. Overall, insurance companies have reduced their stake in Sensex stocks, from 7.7 per cent in June 2014, to 6.4 per cent in September 2020 (5.9 per cent in December 2020). L&T and NTPC were among the few stocks which insurers favoured.

Individuals, a mixed trend

Similar to DIIs and FPIs, HNIs too increased their stake in NTPC, up from 0.2 per cent in 2014 June to 2.3 per cent in the recent December quarter.

Retail investors preferred ONGC instead. While retail investors favoured L&T like insurance companies, they lapped up SBI and HDFC Bank, even as insurers cut exposure.

Retail investors have offloaded their stake in stocks such as Reliance Industries, Infosys and Hindustan Unilever though.