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FPI holding in NSE-listed cos at 5-yr high; bank, finance stocks top picks

In the quarter ended March 2013, FPIs had invested a net of Rs 55,622 crore, resulting into a 1.32 percentage point jump in their holding, from 19.54 as of December 2012 to 20.86 per cent.

Written by Sandeep Singh | New Delhi |
Updated: February 8, 2021 2:31:10 am
As markets rose sharply in the third quarter of FY21, the value of FPI ownership in rupee terms reached an all-time high of Rs 41.83 lakh crore as on December 31, 2020, up 29 per cent from Rs 32.47 lakh crore as on September 30, 2020.

Led by record net inflows by FPIs amounting to Rs 1,41,915 crore in domestic equities in the third quarter this fiscal, FPI ownership in NSE-listed companies hit a five-year high of 22.74 per cent at the end of December 2020, up from 21.51 per cent as on September 30, 2020. The previous high in FPI ownership in NSE-listed companies was seen in December 2015, when it stood at 23.01 per cent.

According to the data sourced from primeinfobase.com, an initiative of Prime Database Group, the foreign portfolio investor (FPI) ownership jumped by 1.23 percentage points — highest quarter-on-quarter rise in seven years — as their ownership rose from 21.51 per cent last September to 22.74 per cent in December 2020.

In the quarter ended March 2013, FPIs had invested a net of Rs 55,622 crore, resulting into a 1.32 percentage point jump in their holding, from 19.54 as of December 2012 to 20.86 per cent.

As markets rose sharply in the third quarter of FY21, the value of FPI ownership in rupee terms reached an all-time high of Rs 41.83 lakh crore as on December 31, 2020, up 29 per cent from Rs 32.47 lakh crore as on September 30, 2020. During the quarter, the benchmark Sensex at BSE and the Nifty at NSE rose 25 per cent.

Banks and finance companies were the biggest beneficiaries of FPI inflows during Q3FY21. Seven banks/finance companies emerged in the list of top 10 companies that witnessed maximum net buy (sum of increase in shareholding and average closing price during the quarter) by FPIs during the quarter.

HDFC Bank, Kotak Mahindra Bank, HDFC Ltd, ICICI Bank and Bajaj Finance occupied the top five spots. SBI and Axis Bank too figured in the top 10 list.

While the top 10 companies saw net buy of Rs 63,878 crore by FPIs during the quarter, more than 80 per cent of that (Rs 51,575 crore) went into the seven bank and finance companies.

The analysis is based on shareholding filed by 1,629 of the total 1,678 companies listed on the NSE (main board) till February 4, 2021.

Even as FPIs invested heavily during the quarter, domestic institutional investors (DIIs) — domestic mutual funds, insurance companies, banks and financial institutions among others — took a back seat following profit booking by domestic investors.

The overall holding of DIIs in NSE-listed companies fell from 13.94 per cent last September to 13.55 per cent in December 2020. While mutual funds saw their holding reduce from 7.65 per cent to 7.42 per cent, that of insurance companies fell from 5.17 per cent to 5 per cent in the same period.

LIC — the single largest institutional investor in India — saw its holding (across 290 companies, where it holds over 1 per cent) slip to an all-time low of 3.70 per cent as on December 31. As on September 30, 2020, LIC’s holding in these companies stood at 3.91 per cent. Its all-time high holding was 5 per cent in June 2012.

Pranav Haldea, MD, Prime Database, said that as retail investors booked profits, net outflows by domestic mutual funds stood at Rs 71,532 crore during the quarter. “Holding of mutual funds has now declined for three consecutive quarters, after 24 quarters of continuous rise from 2.80 per cent as on March 31, 2014 to 7.96 per cent as on March 31, 2020.”

Meanwhile, the percentage holding of the central government (as promoter) in companies listed on the National Stock Exchange (NSE) hit yet another all-time low (fourth quarter in a row) of 5.08 per cent as on December 31, 2020, down from 5.10 per cent as on September 30, 2020.

Over an 11-year period (since June 2009), the holding has been steadily declining, from 22.46 per cent as on June 30, 2009, due to the government’s divestment programme, not enough new listings as also lacklustre performance of many CPSEs relative to their private peers, said Haldea.

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