Global turmoil, slow reforms: FIIs cut stake in 22 of 28 Nifty cos in April-June

Foreign institutional investors or FIIs, key drivers of the Indian stock market rally over the past two decades or so, seemed to have applied brakes on their portfolio investment in local equities during April-June. As these investors turned net sellers of equities in the first three months of the current financial year (2015-16), the initial set of data for Nifty-50 companies also point towards their paring of holdings in majority of the companies in the last quarter. [caption id=“attachment_2343452” align=“alignleft” width=“380”]  Reuters[/caption] Of the 28 Nifty companies for which data is available so far, FIIs trimmed their exposure in 80 percent of the companies, i.e they cut their position in 22 stocks while they raised their ownership in remaining six companies. (See the table here ) Fall in ownership in several companies can also be linked to the net outflow numbers seen in the last three months from Indian equities. As per the data available on capital market regulator website Sebi, FIIs were net sellers of equities to the tune of Rs 4,637 crore, excluding the close to Rs 16,000 crore Daiichi Sankyo-Sun Pharma deal that was executed in April. Similarly, foreign investors sold domestic shares to the tune of Rs 3,460 crore in May and followed it with another Rs 6,149 crore worth of share offloading in May, aggregating total pull out of Rs 14,246 crore from Indian equities in last three months. FIIs, whose net aggregate holding of Indian equities stands at Rs 20.37 lakh crore of the total value of Rs 103.40 lakh crore as on July 14, pared their holding in several PSU and private banking companies. For instance, FIIs cut their stake in Axis Bank by 2.1 percent to 44.51 percent, in Bank of Baroda by nearly 3 percent to 13.55 percent, in Punjab National Bank by 1.2 percent to 14.98 percent, in Kotak Mahindra Bank by 1.5 percent to 35.32 percent and in IndusInd Bank by 1.1 percent to 38.58 percent. Overseas investors also marginally cut their position in HDFC Bank, ICICI Bank and State Bank of India. Cement companies also fell out of favour, with FIIs cutting their exposure in Ambuja Cements by nearly 4.1 percent to 26.25 percent, followed by a 1.2 percent fall in holding to 14.35 percent in ACC and by 0.8 percent to 18.52 percent in UltraTech Cement. Private power company Tata Power saw FIIs shedding their ownership by 3.6 percent to 25.16 percent, while total holding in HeroMoto Corp fell by 2.3 percent to 38.45 percent in the last quarter. Amid worries of sluggish growth, lack of pick-up in reforms and fresh concerns in overseas markets, the benchmark Sensex too exhibited a divergent trend in the last three months. While the index dropped 3.4 percent in April, it rose 3 percent in the following month before ending with a marginal fall of 0.2 percent in June. Of the six companies in which overseas investors raised their holding, FII ownership in tech major Infosys increased by 3 percent to 40.99 during the quarter under review, while it went up by nearly 2.1 percent in Lupin. “This could be viewed as a normal churning in their emerging market investment portfolio. We believe, the trend may reverse as most of the economic indicators point towards a revival and these overseas investors will once again rush back to raise their holdings,” said G Chokkalingam, founder & managing director of Equinomics Research. On the contrary, domestic institutional investors or DIIs increased their ownership in 24 out of 28 companies in the Nifty pack. In fact, domestic mutual funds infused Rs 23,746 crore in Indian equities, indicating the uptick in their total aggregate ownership in the last quarter. DII holding was the biggest in FMCG major ITC, in which total stake ownership increased by 5.5 percent to 40.22 percent. Also, DII holding in Tata Power Company rose by 3.7 percent to 25.99 percent, and by 3.5 percent to 13.71 percent in Tech Mahindra. Of the four companies in which DIIs shed their holding, Lupin saw domestic institutions reduce their stake by 1.8 percent to 6.82 percent. Data compiled by Kishor Kadam