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India Equity Strategy
Color of Money: Tracking institutional ownership...
• Special focus – Quarterly changes in Institutional ownership. Latest data
released for the September quarter indicates that aggregate holdings of FIIs in
Indian equities has increased signficantly and reached a historic high level of
15%. DIIs however reduced their ownership of Indian equities. While the
trend was muted in the case of insurance companies, it was more pronounced
in the case of domestic mutual funds.
• Mixed sectoral trends. Materials appear to be finding favor across investor
categories. While DIIs have been buying into IT services and reducing their
positions in Financials, FIIs have been doing the reverse.
• Portfolio positioning. Currently FII portfolios are overweight Financials and
Consumer Discretionary and underweight IT services and Energy. DIIs are
currently overweight Consumer staples & Utiltiies and underweight IT
services, Financials and Energy.
• J.P. Morgan portfolio stance. Our portfolio stance remains biased towards
Financials, Industrials and Energy. We remain cautious on the consumption
cycle, particularly Autos , Telecom and Materials.
• Benchmark rates hiked; liquidity remains tight. Liquidty in the interbank
system remains tight and the yield curve is bear flattening. The RBI hiked
benchmark interest rates by 25 bps in the November credit policy meeting to
anchor inflationary expectations. But has conducted open market operations
(OMOs) a few times since, to inject liquidity. The Central bank has defined its
comfort zone of liquidity surplus and deficit as1% of GDP and we expect
more measures to be annouced by the RBI to achieve this.
• Insider activity. Insiders were net sellers over the month.
Net buy: HCL Tech, United Spirits, Kotak Mahindra Bank, HDFC,
Hindalco, Jaiprakash Associate
Net Sell: Ambuja Cement, Dr. Reddy’s Lab, DLF, L&T, Jindal Steel &
Power, HDFC Bank, M&M
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