FII holding in top 500 cos highest since Mar 2010
New Delhi: Foreign Institutional Investors (FIIs) holding in top Indian companies has reached their highest level since March 2010 on account of strong domestic consumption and sound financial system.
FIIs' aggregate holding in BSE 500 companies has gone up from 11.3 percent in March 2010 to 12.6 percent in March 2012, according to a report prepared by ICICI Direct.
Listed companies update their quarterly shareholding pattern with stock exchanges with a lag of one month or more.
FII holding climbed by 2.3 percent in December quarter of 2011 to 12.6 percent in January-March quarter of 2012 with the BSE 500 index rising by 17 percent to 6,759 level in March 2012 from 5,779 levels in December 2011.
"The optimism displayed by FIIs in the Indian corporate growth story arises from the fact that the Indian economy remained relatively insulated from the global economic meltdown mostly on account of the strong domestic consumption, thrust on infrastructure development and a strong banking system," ICICI Direct Research Head Pankaj Pandey said.
The resilience of the Indian economy reaffirmed the faith of FII investors who have increased their holding in Indian companies.
After pulling out Rs 53,052 crore in the calendar year 2008 during the global economic meltdown, FIIs have invested Rs 85,368 crore in 2009 and Rs 1,34,294 crore in 2010, he added.
However, in 2011, FII investments in equity were volatile with a cumulative net outflow of Rs 3,358 crore. In the first three months of 2012 has seen a deluge of investment with FIIs pumping funds to the tune of Rs 44,500 crore.
After March, a combination of poor global sentiment and local macroeconomic factors have impacted the Indian stock markets and FII's appetite for stocks.
However, in terms of sectoral exposure, banking has maintained its position as the top allocated sector during the last nine quarters, while IT sector has been most stable in terms of allocation.
The real estate sector, however, after the initial euphoria, has seen lower allocation over the last nine quarters.
Individually, banking space has been able to maintain its top allocation with a 10.9 percent stake in March quarter, although the quantum has come down from the high of 13.2 percent in December 2008 after the global meltdown in the second half of that years.
FII's increased their ownership in automobile sector from 4 percent in March 2010 to 6 percent in March 2012 and in the FMCG sector too their holding went up from 3.6 percent to 4.7 percent in the same period.
In contrast, FII stakes in the construction and infrastructure segment went down from 9.2 percent in March 2010 to 6.6 percent in March 2012.
Besides, FII effected a decline in their stake from 7.8 percent to 5.4 percent in the same period in the realty sector and from 9.5 percent to 7.1 percent in the metal sector.
The telecom sector too witnessed a dip in holding from 5.8 percent to 4.5 percent. IT sector also has witnessed a decline in FII holding from 4.6 percent to 3.6 percent as there is weak visibility on global spending.
On a quarter-on-quarter basis, FIIs were bullish on the capital goods and IT sectors and increased their allocation to these areas, while they reduced exposure to the power and telecom sectors.
However, FIIs have increased aggregate holdings in BSE 500 companies, while promoter and mutual fund holdings have decelerated in these companies.
Promoters' holding on an aggregate basis came down to 57.8 percent in March 2012 from 60.4 percent in March 2010, while domestic mutual funds have reduced their holding in the companies to 3 percent from a total of 3.5 percent in March 2010.