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India Equity Research Reports, IPO and Stock News
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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 December quarter indicates that aggregate holdings of FIIs in
Indian equities continues to be around historic high levels of 15%. DIIs
however continue to reduce their ownership of Indian equities, given
sustained redemptions.
• Global sectors in favour. Over the last quarter, both FIIs and DIIs increased
allocations to global sectors at the expense of local sectors (vs. the MSCI
India and NIFTY benchmarks respectively), particularly rate sensitives. Our
monthly money flow monitor suggests that the trend likely continued over
January as well. The Energy sector in particular appears to be finding favor
across investor categories. The trend could be driven by improving data points
on the global recovery. Stubbornly high inflation and tight liquidity remain
issues for the Indian economy.
• Portfolio positioning. FIIs significantly reduced the extent of their
overweight in Financials from over 8.1% to 5.3% over the last quarter. FII
portfolios are overweight Financials and Consumer Discretionary and
underweight Energy, IT services and Utilities. DIIs are overweight Consumer
staples & Utilties and underweight IT services, Financials and Energy.
Despite the recent sectoral rotation, both FIIs and DIIs remain overweight
local sectors vs. global sectors, indicating their structural bias.
• J.P.Morgan portfolio stance. We have been recommending a) an overweight
stance on global sectors for the early part of the year and b) buying into the
weakness in Financials and Industrials for a recovery into the second half. We
are underweight consumption. In our view, consumption sectors are over
owned and the headwinds associated with sustained high inflation and rising
interest rates are not priced into valuations.
• Benchmark rates hiked; liquidity remains tight. Liquidity in the interbank
system remains tight and the yield curve is bear flattening. The RBI hiked
benchmark interest rates by 25 bps in the January credit policy meeting to
anchor inflationary expectations. But it has conducted open market operations
(OMOs) a few times since to inject liquidity.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Equity Strategy
Color of Money: Tracking Institutional Ownership...
• Special focus – Quarterly changes in Institutional ownership. Latest data
released for the December quarter indicates that aggregate holdings of FIIs in
Indian equities continues to be around historic high levels of 15%. DIIs
however continue to reduce their ownership of Indian equities, given
sustained redemptions.
• Global sectors in favour. Over the last quarter, both FIIs and DIIs increased
allocations to global sectors at the expense of local sectors (vs. the MSCI
India and NIFTY benchmarks respectively), particularly rate sensitives. Our
monthly money flow monitor suggests that the trend likely continued over
January as well. The Energy sector in particular appears to be finding favor
across investor categories. The trend could be driven by improving data points
on the global recovery. Stubbornly high inflation and tight liquidity remain
issues for the Indian economy.
• Portfolio positioning. FIIs significantly reduced the extent of their
overweight in Financials from over 8.1% to 5.3% over the last quarter. FII
portfolios are overweight Financials and Consumer Discretionary and
underweight Energy, IT services and Utilities. DIIs are overweight Consumer
staples & Utilties and underweight IT services, Financials and Energy.
Despite the recent sectoral rotation, both FIIs and DIIs remain overweight
local sectors vs. global sectors, indicating their structural bias.
• J.P.Morgan portfolio stance. We have been recommending a) an overweight
stance on global sectors for the early part of the year and b) buying into the
weakness in Financials and Industrials for a recovery into the second half. We
are underweight consumption. In our view, consumption sectors are over
owned and the headwinds associated with sustained high inflation and rising
interest rates are not priced into valuations.
• Benchmark rates hiked; liquidity remains tight. Liquidity in the interbank
system remains tight and the yield curve is bear flattening. The RBI hiked
benchmark interest rates by 25 bps in the January credit policy meeting to
anchor inflationary expectations. But it has conducted open market operations
(OMOs) a few times since to inject liquidity.
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