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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 10.2% in June 2009 to 12.5%
in June 2011. 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 a
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. Q1CY11 was characterised by a pre-Budget sell-off with FIIs being net
sellers to the tune of | 3100 crore while Q2CY11 has seen positive inflows to
the tune of | 5171 crore. FII holding has reduced by 0.3% in Q2CY11 with the
BSE 500 index correcting by 2.7% to 7265 level in June 2011 from 7464 level
in March 2011. The BSE 500 index has exhibited a positive correlation with
the FII holding (Exhibit 2) while the role of other stakeholders has been
insignificant.
Most preferred sectors
• Banking
• Metals
• Construction and Infrastructure
Banking, undoubtedly, has been the most favoured
sector of various stakeholders. The allocation to the
banking sector by all stakeholders is still below its
earlier peak allocation before the global meltdown.
Stakeholders have shown their faith in the Indian
banking system and there appears to be enough room
for higher allocation for the banking sector, going
ahead…
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 9.7% in June 2011 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 &
infrastructure and power sector have seen higher allocation during the
period. The allocation to the scam embroiled telecom sector has risen
marginally from 4.4% in Q1CY11 to 4.5% in Q2CY11 after declining for six
consecutive quarters from a peak allocation of 6.5% in Q3CY09. The oil &
gas sector has seen a QoQ decline in allocation of 2.6%. Allocation to the
power sector, which had increased by 27% in Q4CY10 mainly on account of
FIIs investing in the PowerGrid FPO in November 2010, has come down
from 8.9% in Q1CY11 to 8.5% in Q2CY11. The metal sector has maintained
its position as the second highest allocated sector in spite of a 2.3% QoQ
decline to 8.8%. The IT sector has 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 3.3-3.6% for the last nine quarters.
Banking, metals, construction & infrastructure and oil & gas have the
highest allocation in the mutual fund portfolio. Significant allocation has
been made in regulated sectors like power and oil & gas. Allocations to IT
and FMCG and capital goods have remained stable. Allocation to the
power and telecom sectors have increased ~ 5% QoQ while real estate,
auto, metals and constructions have seen a decline in the range of 5-25%.
Exposure to the real estate sector, which was 0.5% in Q1CY11, has
further reduced to 0.4% inQ2CY11.
We have analysed the investment pattern of the stakeholders for BSE 500
companies 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. In Q2CY11, FIIs
have maintained their exposure to the banking and construction sector
while their exposure to the metals sector has gone down. MFs have
marginally increased their exposure to banking while they have reduced
their exposure to the metals and construction sectors.
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 10.2% in June 2009 to 12.5%
in June 2011. 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 a
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. Q1CY11 was characterised by a pre-Budget sell-off with FIIs being net
sellers to the tune of | 3100 crore while Q2CY11 has seen positive inflows to
the tune of | 5171 crore. FII holding has reduced by 0.3% in Q2CY11 with the
BSE 500 index correcting by 2.7% to 7265 level in June 2011 from 7464 level
in March 2011. The BSE 500 index has exhibited a positive correlation with
the FII holding (Exhibit 2) while the role of other stakeholders has been
insignificant.
Most preferred sectors
• Banking
• Metals
• Construction and Infrastructure
Banking, undoubtedly, has been the most favoured
sector of various stakeholders. The allocation to the
banking sector by all stakeholders is still below its
earlier peak allocation before the global meltdown.
Stakeholders have shown their faith in the Indian
banking system and there appears to be enough room
for higher allocation for the banking sector, going
ahead…
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 9.7% in June 2011 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 &
infrastructure and power sector have seen higher allocation during the
period. The allocation to the scam embroiled telecom sector has risen
marginally from 4.4% in Q1CY11 to 4.5% in Q2CY11 after declining for six
consecutive quarters from a peak allocation of 6.5% in Q3CY09. The oil &
gas sector has seen a QoQ decline in allocation of 2.6%. Allocation to the
power sector, which had increased by 27% in Q4CY10 mainly on account of
FIIs investing in the PowerGrid FPO in November 2010, has come down
from 8.9% in Q1CY11 to 8.5% in Q2CY11. The metal sector has maintained
its position as the second highest allocated sector in spite of a 2.3% QoQ
decline to 8.8%. The IT sector has 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 3.3-3.6% for the last nine quarters.
Banking, metals, construction & infrastructure and oil & gas have the
highest allocation in the mutual fund portfolio. Significant allocation has
been made in regulated sectors like power and oil & gas. Allocations to IT
and FMCG and capital goods have remained stable. Allocation to the
power and telecom sectors have increased ~ 5% QoQ while real estate,
auto, metals and constructions have seen a decline in the range of 5-25%.
Exposure to the real estate sector, which was 0.5% in Q1CY11, has
further reduced to 0.4% inQ2CY11.
We have analysed the investment pattern of the stakeholders for BSE 500
companies 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. In Q2CY11, FIIs
have maintained their exposure to the banking and construction sector
while their exposure to the metals sector has gone down. MFs have
marginally increased their exposure to banking while they have reduced
their exposure to the metals and construction sectors.
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