Market Strategy- March 2011 ownership: More reasons to OW Autos, UW Industrials ::Credit Suisse

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India Market Strategy------------------------------------------------------------------------------------------
March 2011 ownership: More reasons to OW Autos, UW Industrials


● Institutional ownership of the Indian market (~800 stocks)
decreased by ~40 bp in the Mar 2011 quarter (Fig 1): this fall was
entirely in FII ownership (FII outflow of US$500 mn). Domestic
instt. and promoter holdings remained unchanged QoQ.
● Nearly half of FII’s portfolio is now in Financials & IT. Domestic
institutions continued with their preference for Staples, PSU banks
and industrials (significantly higher weights than for FII’s). The
OW on consumer discretionary fell to a multi-year low for both
FII’s and domestics: this supports our buy call on Autos (HH).
● Industrials are the only sector where both FIIs and domestic
institutions are OW (Fig 2): we recommend an UW on the sector
due to fundamental reasons – this also adds a technical
perspective to it. Both FIIs and domestic institutions cut weights in
Utilities.
● FIIs increased OW in financials by 120 bp QoQ: OW on private
banks is now at an all-time high (250 bp). Domestic instt. also
increased financial weights but via PSUs, and cut private banks.
Energy and IT services are the two sectors Underweighted by
both FII’s and domestic institutions. UW though declined QoQ; for
Energy partly also due to falling weights in benchmarks. We like
Wipro, Reliance and GAIL.