FIIs and UTI differ in stocks strategy

Further, UTI has sold stocks worth over Rs 1,510 crore in 18 stocks (including six stocks mentioned above), which also includes, Gail (India), Bharat Heavy Electricals Limited (BHEL), Bharat Petroleum (BPCL), Oil and Natural Gas Corporation (ONGC), Ashok Leyland, Glaxo Smithkline and ICICI Bank.

When contacted, UTI chairman M. Damodoran said, “This not the house view and these investment decisions are taken at the individual fund level by concerned fund managers.”

A Kotak Institutional Equities’ study says that like UTI, other major institutional investors such as domestic mutual funds (MFs) and Life Insurance Corporation (LIC) have also taken a contrarian stance to that of FIIs. They have been sellers in stocks such as Mahindra & Mahindra, OBC, Grasim, Bank of Baroda, Satyam Computers, Punjab National Bank, Bajaj Auto and Infosys. FIIs, on the other hand, have been accumulating these stocks. But these institutions have been buyers in stocks such as Raymonds, Voltas, Apollo Tyres, Wockhardt, Tata Telecom, Siemens, Gujarat Ambuja Cements and Gail. FIIs have been sellers in these counters.

FIIs have curtailed their exposure substantially in Mastek (11 per cent of its equity), Balaji Telefilms (6 per cent), Shyam Telecom (6 per cent), Indo Gulf Fertilisers (5.6 per cent), Essel Propack (3.4 per cent), United Phosphorus (2.8 per cent), Gail (2 per cent), Gujarat Ambuja Cements (1.6 per cent), Digital (1.4 per cent) and Hero Honda (1.2 per cent). FIIs have pulled out Rs 445 crore from these 10 stocks, says the Kotak research report. The maximum investment by FIIs in a single company has been in Reliance Industries, where they have picked up 2 per cent of the company’s equity by shelling out over Rs 925 crore during the quarter. UTI, on the other hand, has fetched Rs 593 crore by selling around 1.3 per cent of Reliance’s equity.

FIIs have upped their holding in a number of companies and their stakes have gone up as high as 9 per cent of a company’s equity. FIIs have picked up 9 per cent stake of Union Bank of India’ equity, 4.5 per cent of Satyam Computer’s equity, 41.1 per cent equity stake in Mahindra & Mahindra and Larsen & Toubro, OBC (3.3 per cent), Grasim (3 per cent), Zee Tele (2.8 per cent), PNB (92.5 per cent), Bajaj Auto (2.3 per cent) and 2.2 per cent of the equity in case of BoB, IDBI, HDFC.

The Kotak study says that while FII investment of around $800 million (Rs 3,700 crore) has been in made in sectors like banking and chemicals, LIC and UTI have been exiting from these sectors.

FII have gone overweight in banking and technology sector as on June 30, 2003, and are underweight in energy sector. UTI on the other hand is overweight in consumers, energy and metals and is underweight in technology.