India Ownership Trends- FIIs get keen, DIIs still lean: Religare

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India Ownership Trends
FIIs get keen, DIIs still lean on Indian equities
Foreign institutional ownership in Indian markets has shown a sharp uptick
through an action-packed Q2FY11, which saw US$ 12bn of net inflows.
September ’10 data on BSE500 companies shows foreign investor
(FII+ADR+GDR) market share rising to 17.8%, at the cost of domestic mutual
funds (down to 3.76%), even as the insurance share remained flat at 5.25%.
While the financials space has remained in favour, consumer staples and
telecoms too have seen increased allocation. Apart from energy, FIIs are also
underweight on IT services.


FII ownership surges, portfolio now at all-time high: Capital inflows of
US$ 12.5bn in the second quarter had an expected impact, not only on the
markets (Sensex +14.6%, BSE500 +13.4%) and on the primary issuance pipeline,
but on foreign investor (FII+ADR+GDR) ownership, which rose to 17.8% from
16.6% over April–June—the highest quarterly rise in nearly three years (after
December ’07). The overall value of the FII portfolio also leaped 27% to US$
267bn by September ’10 versus US$ 210bn in June, and has now crossed its
earlier peak of US$ 264bn in December ’07.

Insurance cos share remains flat; DMFs continue due south: Domestic
institutions saw their overall market share in the BSE500 drop on the back of high
foreign capital inflows—redemption pressures continued for DMFs—with a
decline of 21bps to 3.76% (portfolio at US$ 56bn). The insurance share
remained flat for the third consecutive quarter (equity portfolio at US$ 79bn).
And with almost no new fund-raising and equity fund redemption of US$ 3bn
(highest-ever outflows of US$ 1.6bn recorded in September), mutual funds look
set to concede a further share in ownership.

Financials, consumption plays remain sectors of choice: Most of the foreign
capital found its way into the financials sector, largely playing the India growth
story through banks, while telecom and consumer staples saw interest from
domestic institutions. Apart from energy (understandable due to the skew from
Reliance), IT (skew from Infosys) stands out as an under-owned sector across all
institutional investor groups.

Movers and shakers of Q2FY11 for FIIs: Stocks with the highest sequential rise in
FII shareholding include Persistent Systems, Strides Arcolab, REI Agro whereas
Tanla Solutions, D C Holdings, Lakshmi Energy have been the top FII sells
this quarter.