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Ownership patterns
Our analysis of the shareholding pattern of the BSE-500 companies (combined
market cap US$1.3trn now – 94% of total market cap) reveals that during
4QCY10, FIIs increased market holding by 25 bps to 15.5%. During 4QCY10,
FIIs net invested US$10bn into the markets. FII holding is still 90bps lower
than 2007 peak.
Holdings of domestic institutional investors (domestic mutual funds +
insurance + others) and is down 35bps QoQ to 10.5%.
Ownership of domestic institutions has been on the down for the past two
quarters and the holding is down 63bps from June’10 level. Mutual funds
industry has seen an outflow of US$2.8bn since June’10.
However, the above trend should reverse in 1QCY11, as it does every year due
to inflows into insurance / MFs due to tax savings. In each of the past three
years, we estimate that domestic institutional investors have bought on an
average US$3.3bn of during the March quarter. The same number, so far is
US$1.1bn for 1QFY11td. We also note that as at Dec’10, the domestic mutual
funds industry carries a cash of US$2.8bn on books.
Interestingly, the incremental flows from FIIs have not gone into the frontline
stocks, instead bulk of the FIIs flows have gone in Tier II companies
(US$6.5bn > M cap > US$2bn). DII outflows have been spread evenly
between large caps and small caps.
FIIs (incl ADR / GDR) continue to remain O-WT on banks, real estate and
autos, while U-WT on metals and technology
DIIs carry O-WT on banks, cap goods and consumer and are U-WT on
technology, and oil & gas.
Overweight on PSU banks by DIIs and FIIs, especially for SBI may the stock
vulnerable towards flows – especially given the concerns on asset quality.
On the positive side, FIIs and DIIs are both U-WT on technology. While Infosys
has now become the largest benchmark stock with more than 10% weight and
therefore difficult to witness incremental buying, TCS and Wipro could benefit.
Additionally, the industry fundamentals continue to look good.
We also see a limited downside risk to Reliance and ITC due to U-WT position
by FIIs. Of the two, ITC is an O-WT for DIIs but as highlighted earlier, during
the March quarter DIIs tend to be net buyer. We also note that ITC has
recently underperformed the market due to concerns on excise duty issues.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ownership patterns
Our analysis of the shareholding pattern of the BSE-500 companies (combined
market cap US$1.3trn now – 94% of total market cap) reveals that during
4QCY10, FIIs increased market holding by 25 bps to 15.5%. During 4QCY10,
FIIs net invested US$10bn into the markets. FII holding is still 90bps lower
than 2007 peak.
Holdings of domestic institutional investors (domestic mutual funds +
insurance + others) and is down 35bps QoQ to 10.5%.
Ownership of domestic institutions has been on the down for the past two
quarters and the holding is down 63bps from June’10 level. Mutual funds
industry has seen an outflow of US$2.8bn since June’10.
However, the above trend should reverse in 1QCY11, as it does every year due
to inflows into insurance / MFs due to tax savings. In each of the past three
years, we estimate that domestic institutional investors have bought on an
average US$3.3bn of during the March quarter. The same number, so far is
US$1.1bn for 1QFY11td. We also note that as at Dec’10, the domestic mutual
funds industry carries a cash of US$2.8bn on books.
Interestingly, the incremental flows from FIIs have not gone into the frontline
stocks, instead bulk of the FIIs flows have gone in Tier II companies
(US$6.5bn > M cap > US$2bn). DII outflows have been spread evenly
between large caps and small caps.
FIIs (incl ADR / GDR) continue to remain O-WT on banks, real estate and
autos, while U-WT on metals and technology
DIIs carry O-WT on banks, cap goods and consumer and are U-WT on
technology, and oil & gas.
Overweight on PSU banks by DIIs and FIIs, especially for SBI may the stock
vulnerable towards flows – especially given the concerns on asset quality.
On the positive side, FIIs and DIIs are both U-WT on technology. While Infosys
has now become the largest benchmark stock with more than 10% weight and
therefore difficult to witness incremental buying, TCS and Wipro could benefit.
Additionally, the industry fundamentals continue to look good.
We also see a limited downside risk to Reliance and ITC due to U-WT position
by FIIs. Of the two, ITC is an O-WT for DIIs but as highlighted earlier, during
the March quarter DIIs tend to be net buyer. We also note that ITC has
recently underperformed the market due to concerns on excise duty issues.
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