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India Equity Research Reports, IPO and Stock News
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Promoters, public, FIIs and MFs are the major equity stakeholders in a listed corporate
entity. Of the stakeholders, FIIs have been major investors in Indian corporates, as is
evident from the accompanying chart (Exhibit 1), with their holding in BSE 500
companies moving up from 9.8% in December 2008 to 13.2% in December 2010. The
optimism displayed by FIIs in the Indian corporate growth story arises from the fact
that the Indian economy remained relatively insulated from the global economic
meltdown mostly on account of the strong domestic consumption, thrust on
infrastructure development and strong banking system. The resilience of the Indian
economy reaffirmed the faith of FII investors who have increased their holding in
Indian companies. After pulling out | 53,052 crore in CY08 during the global economic
meltdown, FIIs have invested | 85,368 crore in CY09 and | 1,34,294 crore in CY10. In
the first two months of CY11, FIIs have been net sellers in equities to the extent of |
10,000 crore with the BSE 500 index correcting by 14% to 6850 level from 7960 level
in December 2010. The BSE 500 index has exhibited a positive correlation with the FII
holding (Exhibit 2) while the role of other stakeholders has been insignificant.
We have analysed the investment pattern of the stakeholders and calculated the
allocation (percentage) of their equity investment portfolio in various business
segments. We have reviewed the sectoral allocation made by these players over the
last nine quarters to gauge their sectoral preferences. Banking, metals and
construction have got the maximum allocation from the various stakeholders.
FII equity investments
Our analysis of the equity investment portfolio of FIIs reveals that banking has been
able to maintain its top allocation though the quantum has come down from 13.2%
in December 2008 to 10.3% in December 2010 after the global meltdown in the
second half of CY08. FIIs have shown faith in the Indian consumption and
infrastructure story as the FMCG, construction and infrastructure sector have seen
higher allocation during the period. The exposure to highly regulated sectors has
been gradually reduced as can be seen from lower allocation for telecom and oil &
gas. Allocation to the power sector has increased by 29% mainly on account of FIIs
investing in the PowerGrid FPO in November 2010. Though the metal sector has got
the second highest allocation, December 2010 has seen a 5% QoQ reduction in
allocation to 8.6% from 9.1%. The auto and IT sectors have been most stable in
terms of allocation whereas real estate, after the initial euphoria, continues to see
lower allocation.
MF equity investments
Contrary to FIIs, MFs were unable to have a significant impact on the market
owing to liquidity concerns relating to limited inflows and redemption pressure.
MF holdings in BSE 500 companies have remained within a narrow range of 3.3-
3.7% for the last nine quarters.
Banking, metals, construction and infrastructure have the highest allocation in
the mutual fund portfolio. Significant allocation has been made in regulated
sectors like power and oil & gas. Allocations of IT and FMCG have remained
stable while allocation for pharma has increased from 3.6% to 4.1%. Exposure
to the real estate sector is limited to less than 1% of the portfolio.
Public equity investments
The Indian public investment pattern has been in line with institutional investors like
FIIs and MFs with regard to major portfolio allocation being distributed between
banking, power, metals and construction and infrastructure. Regulated sectors like
oil & gas have significant allocation. Telecom, which earlier had higher allocation in
the range of 7-8%, has moderated to less than 6%. Among major sectors, real
estate has got minimum allocation. The top sectors, namely banks, power, metals,
construction and infrastructure account for ~ 35% of the allocation.
Companywise shareholding analysis
The investment actions (buy/sell) of FIIs, MFs and promoters can indicate the sentiment about the future prospects of a
company. We have compared the shareholding pattern of BSE 500 companies for Q2FY11 and Q3FY11 and listed the
category wise movement in shareholdings of these major stakeholders.
We have considered the BSE 500 index as the benchmark and calculated the outperformance/underperformance of the
individual stock price compared to the benchmark index.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Promoters, public, FIIs and MFs are the major equity stakeholders in a listed corporate
entity. Of the stakeholders, FIIs have been major investors in Indian corporates, as is
evident from the accompanying chart (Exhibit 1), with their holding in BSE 500
companies moving up from 9.8% in December 2008 to 13.2% in December 2010. The
optimism displayed by FIIs in the Indian corporate growth story arises from the fact
that the Indian economy remained relatively insulated from the global economic
meltdown mostly on account of the strong domestic consumption, thrust on
infrastructure development and strong banking system. The resilience of the Indian
economy reaffirmed the faith of FII investors who have increased their holding in
Indian companies. After pulling out | 53,052 crore in CY08 during the global economic
meltdown, FIIs have invested | 85,368 crore in CY09 and | 1,34,294 crore in CY10. In
the first two months of CY11, FIIs have been net sellers in equities to the extent of |
10,000 crore with the BSE 500 index correcting by 14% to 6850 level from 7960 level
in December 2010. The BSE 500 index has exhibited a positive correlation with the FII
holding (Exhibit 2) while the role of other stakeholders has been insignificant.
We have analysed the investment pattern of the stakeholders and calculated the
allocation (percentage) of their equity investment portfolio in various business
segments. We have reviewed the sectoral allocation made by these players over the
last nine quarters to gauge their sectoral preferences. Banking, metals and
construction have got the maximum allocation from the various stakeholders.
FII equity investments
Our analysis of the equity investment portfolio of FIIs reveals that banking has been
able to maintain its top allocation though the quantum has come down from 13.2%
in December 2008 to 10.3% in December 2010 after the global meltdown in the
second half of CY08. FIIs have shown faith in the Indian consumption and
infrastructure story as the FMCG, construction and infrastructure sector have seen
higher allocation during the period. The exposure to highly regulated sectors has
been gradually reduced as can be seen from lower allocation for telecom and oil &
gas. Allocation to the power sector has increased by 29% mainly on account of FIIs
investing in the PowerGrid FPO in November 2010. Though the metal sector has got
the second highest allocation, December 2010 has seen a 5% QoQ reduction in
allocation to 8.6% from 9.1%. The auto and IT sectors have been most stable in
terms of allocation whereas real estate, after the initial euphoria, continues to see
lower allocation.
MF equity investments
Contrary to FIIs, MFs were unable to have a significant impact on the market
owing to liquidity concerns relating to limited inflows and redemption pressure.
MF holdings in BSE 500 companies have remained within a narrow range of 3.3-
3.7% for the last nine quarters.
Banking, metals, construction and infrastructure have the highest allocation in
the mutual fund portfolio. Significant allocation has been made in regulated
sectors like power and oil & gas. Allocations of IT and FMCG have remained
stable while allocation for pharma has increased from 3.6% to 4.1%. Exposure
to the real estate sector is limited to less than 1% of the portfolio.
Public equity investments
The Indian public investment pattern has been in line with institutional investors like
FIIs and MFs with regard to major portfolio allocation being distributed between
banking, power, metals and construction and infrastructure. Regulated sectors like
oil & gas have significant allocation. Telecom, which earlier had higher allocation in
the range of 7-8%, has moderated to less than 6%. Among major sectors, real
estate has got minimum allocation. The top sectors, namely banks, power, metals,
construction and infrastructure account for ~ 35% of the allocation.
Companywise shareholding analysis
The investment actions (buy/sell) of FIIs, MFs and promoters can indicate the sentiment about the future prospects of a
company. We have compared the shareholding pattern of BSE 500 companies for Q2FY11 and Q3FY11 and listed the
category wise movement in shareholdings of these major stakeholders.
We have considered the BSE 500 index as the benchmark and calculated the outperformance/underperformance of the
individual stock price compared to the benchmark index.
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