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India Strategy
Identifying Over-Owned/
Under-Owned Stocks
FII portfolio: U/W on IT & Consumer and O/W on Industrial
fall; U/W on energy & O/W on telecom rise
During the quarter while FIIs were net sellers, domestic MFs & LIC were net
buyers. FII holding in Sensex has come down marginally.
FIIs were positive on defensives like Consumers & Telecom whereas they
sold across most of the other sectors like Financials, Metals and Industrials.
FII ownership in SBI is at all time low whereas Industrials has become an
U/W sector for the first time due to this selling.
Financials, the favorite sector for FII, saw significant selling during the quarter
bringing down the O/W marginally. Industrials was another sector sold by the
FIIs resulting in reduction in its O/W. The Software sector was the biggest
sector bought by the FIIs, followed by Consumers, resulting in change in their
respective O/W and U/W.
In terms of long term trends, while the underweight of energy continues to
come down, Industrials has become an underweight sector. On the other
hand, consumers are no longer an underweight sector due to consistent
buying done every quarter. Also Financials has seen its weight come down.
Within Banks while FIIs have sold names like SBI, ICICI, Axis, they have
increased exposure in Kotak. Any surprise in these names can reverse the
trend.
Key buys in this quarter were: Infy, ITC, TCS, HDFC, HUL and Wipro .
Key sells were: ICICI Bk, L&T, Coal India, Axis Bank and RIL..
Domestic MF Portfolio: U/W on metals fall; O/W on
Industrials rise
Domestic MF portfolio is in stark contrast with that of FIIs, with Industrials
being major O/W sector, sector where FIIs are marginally positive. Consumer
is another sector where domestic MFs are heavily O/W in contrast to FIIs who
are not. They are also U/W Financials where FIIs are O/W. However, on the
similar lines of FIIs, domestic MFs are also U/W commodities.
In contrast to FIIs, MFs bought Metals and sold consumer & telecom names.
On the similar lines of FIIs, MFs also bought software and cement names.
During the quarter mutual funds bought Software, Industrials, Metals &
Energy and sold consumers & Telecom.
LIC net buyer
On the similar lines of MFs who were buyers, LIC was also a net buyer. LIC
bought Financials (SBI, HDFC Bank), Utilities (Tata Power) and Energy (RIL). LIC
s old Cement (Ultratech, ACC), Software (Infy) and Telecom (Bharti).
Market Ownership Structure
During December quarter FIIs continued to remain pessimistic on the Indian
markets on the back of slowdown worries and high rates. This was reflected by
the selling done by the FIIs during the quarter. Based on average prices in the
BSE-500, similar to the previous quarter, close to USD 1.1bn was taken out of the
Indian equity markets by the FIIs in the quarter. Domestic MFs on the other hand
were buyers during the quarter with a net inflow of close to USD 350mn as
compared to $400mn inflow during the previous quarter
FII ownership analysis
FII interest in the Indian markets remained tepid in 3QFY12. Compared to a
$1.6bn outflow of the previous quarter FII net outflow was $1.2bn for the quarter.
FIIs were positive on defensives like Consumers & Telecom whereas they
sold across most of the other sectors like Financials, Metals and Industrials.
Index changes and variation in quantum of selling also resulted in changes in
OW/UW of few sectors.
FIIs continued with their maximum O/W on financials at the expense of other
sectors. However post MSCI rebalance now only 3 financial companies
figure on the top of the top-10 over-owned list (HDFC, ICICI, and IndusInd
Bank). Due to the MSCI adjustments and strong price performance of the
overweight for sector largely remained unchanged. .
Industrials became an underweight sector for the FIIs after another quarter of
selling done by them.
Metals was the 2nd largest sector which was sold by the FIIs as they sold
Coal India and Tata Steel. However, due to price movements and MSCI
adjustments the underweight remained unchanged.
Software continued to be the largest underweight sector for the FIIs.
However, the sector saw the highest buying done by the FIIs bringing down
the underweight to the levels of Energy sector.
Consumer sector continued to be the favored sector in terms of FII buying. In
order to move into the defensive names, FIIs bought consumer names. This
has further reduced the consumer U/W for the FIIs.
Telecom was another sector bought by the FIIs during quarter leading to
increase in its O/W.
Telecom was another sector bought by the FIIs during quarter leading to
increase in its O/W.
Key buys in this quarter were: Infy, ITC, TCS, HDFC, HUL and Wipro.
Key sells were: ICICI Bk, L&T, Coal India, Axis Bank and RIL.
Over-Owned/Under-owned Stocks and Sectors
by FIIs
We have updated our analysis of FII holdings to determine the sectors and stocks
that FIIs as a whole are OW / UW on, following availability of the shareholding
pattern as on Dec 31, 2011.
Methodology Recap
Based on FII holdings in individual BSE-500 companies, we calculated an
aggregate FII portfolio in India and their percentage holdings in various stocks
and sectors. We then compared this with the MSCI weight to determine sectors
and stocks that FIIs are O/W/U/W on. One anomaly is in the companies that have
issued ADRs/GDRs. Given that these are also partly held by non-FIIs, we should
ideally have included only the FII holding of GDRs/ADRs in our analysis.
However, since we do not get a separate break-up of the ADR/ GDR holding into
FIIs/ non-FIIs, our analysis may show a higher FII weight in stocks with a high
ADR/ GDR component, than is actually the case
Sector Ownership- U/W on IT & O/W on Industrial fall; U/W
on energy & O/W on telecom rise
Financial: Financials, the biggest O/W sector, once again saw net selling by the
FIIs. FIIs sold popular largecap names such as ICICI Bank (USD 670mn), Axis
Bank (USD 200mn), SBI (USD 120mn) and Shriram Transport (USD 60mn).
However FIIs bought HDFC (USD 150mn), HDFC Bank (USD 80mn) and LIC
Housing Fin (USD 50mn). However, the O/W for the FIIs largely remained
unchanged due to MSCI adjustments and strong performance of non-index
stocks.
Metals & Mining: Metals & Mining was another sector which saw significant
selling. FIIs sold Tata Steel (USD 160mn) and Coal India (USD 300mn). However
due to MSCI adjustments and price movements the U/W for the sector largely
remained unchanged.
Software: Software was the most favored sector by the FIIs and bought heavily.
They bought Infosys (USD 380mn), TCS (USD 250mn) and Wipro (USD 120mn).
Due to this the U/W of the sector has come down during the quarter.
Industrials: Industrials continued to lose favor of FIIs and have turned into an
U/W sector for them. They sold L&T (USD 500mn), BHEL (USD 100mn).
Consumers: Consumer sector continued to find favor from the FIIs and saw the
2nd highest buying done by the FIIs. FIIs bought ITC (USD 350mn) and HUL
(USD 160mn). However they sold Renuka Sugars (USD 50mn). Overall the
heavy buying led to the reduction in the underweight for the sector.
Energy: Energy was another underweight sector which saw significant selling
done by FIIs leading to increase in its U/W. FIIs sold RIL (USD 190mn), Cairn
(USD 50mn). However, they bought ONGC (USD 50mn).
Telecom: Telecom was another sector where FIIs increased their O/W by buying
into Bharti (USD 110mn) and Idea (USD 100mn)
Historical Snapshot of the Sector-Ownership Patterns
Industrials which used to be a big O/W sector for FIIs is now underweight
due to the selling done.
The O/W on the financial sector has remained the highest; however it has
come down sharply from the recent levels.
The U/W on the Energy sector continues to come down, however that is
largely on account of index changes.
Consumer sector is no longer an underweight sector once more largely due
to the buying done during quarters.
U/W on Software continues to come down due to index changes as well as
buying done by the FIIs.
Stocks Over-Owned/Under-Owned
Table 4 details the FII holdings in all MSCI stocks and the extent to which they
are O/W/U/W compared to the MSCI Index. Tables 2 and 3 list the top overowned
and under-owned stocks:
Key Highlights:
There are 3 financial stocks in the top 10 over-owned stocks of the FIIs,
including the top-2. This once again reiterates the FII bias towards the sector.
However FIIs have sold heavily over the last 2 quarters.
FII holding in SBI is now at its lowest. Post the MSCI rebalance SBI is now
part of the top-10 U/W stocks for SBI.
FIIs continue to underweight all the heavyweights like Reliance, Infosys,
HUL, and ITC amongst others.
Software continues to be the largest U/W sector for FIIs with Infy, TCS and
Wipro all part of the top-10 U/W stocks list.
There was 1 change in the top -10 over- owned stock lists by FIIs as Maruti
came into the index replacing United Phosphorus.
What FIIs Bought and Sold
FIIs outlook on Indian markets during the quarter remained negative. They
were bearish on Financials, Commodities and Industrials this quarter.
However FIIs showed interest in defensives like Consumers, IT and
Telecom.
Top buys for the FIIs during the quarter were Infy, ITC, TCS, HDFC, HUL
and Wipro. On the other hand top sells were ICICI Bk, L&T, Coal India, Axis
Bank and RIL.
Domestic Mutual Funds
In contrast to FIIs domestic MF showed interest in the Indian equities with an
inflow of $350mn in the quarter similar to the net inflows of previous quarter. They
continued to be positive on the Indian markets and moved out of defensives like
consumer and telecom while moving into sectors like Software and metals.
Domestic mutual fund portfolio is in stark contrast with that of FIIs, with Industrials
being major overweight sector, sector on which FIIs are only marginally positive.
Consumer Staples is another sector where domestic mutual funds are heavily
overweight in contrast to FIIs who are not. They are also underweight Financials
where FIIs are O/W. However, on the similar lines of FIIs, domestic mutual funds
are also underweight metals & mining sector and Energy sectors.
Industrials continue to be the biggest O/W for domestic MF’s. This O/W for
them got further enhanced on account of heavy buying done in the sector
during the quarter.
In contrast to FIIs, for mutual funds Metals was the one of the sectors where
significant buying was seen. On the other hand, unlike FIIs, they sold
consumer names like ITC and telecom names like Bharti.
On the similar lines of FIIs, MFs also bought software led by Wipro, Infy &
HCL Tech. Like FIIs they also bought cement names.
Pharma and energy were other sectors which were marginally bought by the
MFs whereas utilities and financials saw marginal selling.
Sector Ownership- U/W on metals fall; O/W on Industrials
rise
Industrials: Unlike FIIs, Industrial sector was one of the favored sectors by the
MFs. Domestic MFs bought L&T (USD 300mn) & IRB (USD 25mn). However they
sold BHEL (USD 90mn). The net buying in the sector has increased the O/W for
the domestic MFs.
Metals: Metals & mining sector was also favored by the MFs unlike FIIs. This was
largely led by Hindalco (USD60mn), Tata Steel (USD 40mn) and Sterlite (USD
20mn). This resulted in fall in the U/W of metals sector for the FIIs.
Software: Software was one sector where on the similar lines of FIIs, domestic
MFs bought. The buying was led by Wipro (USD 160mn), Infy (USD 60mn) and
HCL Tech (USD 60mn).
Telecom: Telecom was the highest sold sector by the MFs led by Bharti (USD
100mn) and Idea (USD 50mn).
Promoters
On an overall basis promoter stake in BSE-500 has gone up marginally. In few
cases promoters saw their pledged share come being sold by financial institutions
which reduced their stake. Also few companies would have raised funds by way
of additional issues which decreased the promoter stake. Promoters decreased
their stake in companies e.g. in HFCL, Sujana Towers, IRB Infra Dev, ICSA, Bajaj
Hindusthan and Suzlon Energy amongst others. Promoter stake went up in
companies like Everonn, Cairn India, SpiceJet, and Indiabulls Power amongst
others. In terms of promoter pledges companies with high promoter pledges are
Tata Coffee, Gujarat Pipavav, ICSA India, Pipavav Defence, GTL, and Suzlon
Energy.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Strategy
Identifying Over-Owned/
Under-Owned Stocks
FII portfolio: U/W on IT & Consumer and O/W on Industrial
fall; U/W on energy & O/W on telecom rise
During the quarter while FIIs were net sellers, domestic MFs & LIC were net
buyers. FII holding in Sensex has come down marginally.
FIIs were positive on defensives like Consumers & Telecom whereas they
sold across most of the other sectors like Financials, Metals and Industrials.
FII ownership in SBI is at all time low whereas Industrials has become an
U/W sector for the first time due to this selling.
Financials, the favorite sector for FII, saw significant selling during the quarter
bringing down the O/W marginally. Industrials was another sector sold by the
FIIs resulting in reduction in its O/W. The Software sector was the biggest
sector bought by the FIIs, followed by Consumers, resulting in change in their
respective O/W and U/W.
In terms of long term trends, while the underweight of energy continues to
come down, Industrials has become an underweight sector. On the other
hand, consumers are no longer an underweight sector due to consistent
buying done every quarter. Also Financials has seen its weight come down.
Within Banks while FIIs have sold names like SBI, ICICI, Axis, they have
increased exposure in Kotak. Any surprise in these names can reverse the
trend.
Key buys in this quarter were: Infy, ITC, TCS, HDFC, HUL and Wipro .
Key sells were: ICICI Bk, L&T, Coal India, Axis Bank and RIL..
Domestic MF Portfolio: U/W on metals fall; O/W on
Industrials rise
Domestic MF portfolio is in stark contrast with that of FIIs, with Industrials
being major O/W sector, sector where FIIs are marginally positive. Consumer
is another sector where domestic MFs are heavily O/W in contrast to FIIs who
are not. They are also U/W Financials where FIIs are O/W. However, on the
similar lines of FIIs, domestic MFs are also U/W commodities.
In contrast to FIIs, MFs bought Metals and sold consumer & telecom names.
On the similar lines of FIIs, MFs also bought software and cement names.
During the quarter mutual funds bought Software, Industrials, Metals &
Energy and sold consumers & Telecom.
LIC net buyer
On the similar lines of MFs who were buyers, LIC was also a net buyer. LIC
bought Financials (SBI, HDFC Bank), Utilities (Tata Power) and Energy (RIL). LIC
s old Cement (Ultratech, ACC), Software (Infy) and Telecom (Bharti).
Market Ownership Structure
During December quarter FIIs continued to remain pessimistic on the Indian
markets on the back of slowdown worries and high rates. This was reflected by
the selling done by the FIIs during the quarter. Based on average prices in the
BSE-500, similar to the previous quarter, close to USD 1.1bn was taken out of the
Indian equity markets by the FIIs in the quarter. Domestic MFs on the other hand
were buyers during the quarter with a net inflow of close to USD 350mn as
compared to $400mn inflow during the previous quarter
FII ownership analysis
FII interest in the Indian markets remained tepid in 3QFY12. Compared to a
$1.6bn outflow of the previous quarter FII net outflow was $1.2bn for the quarter.
FIIs were positive on defensives like Consumers & Telecom whereas they
sold across most of the other sectors like Financials, Metals and Industrials.
Index changes and variation in quantum of selling also resulted in changes in
OW/UW of few sectors.
FIIs continued with their maximum O/W on financials at the expense of other
sectors. However post MSCI rebalance now only 3 financial companies
figure on the top of the top-10 over-owned list (HDFC, ICICI, and IndusInd
Bank). Due to the MSCI adjustments and strong price performance of the
overweight for sector largely remained unchanged. .
Industrials became an underweight sector for the FIIs after another quarter of
selling done by them.
Metals was the 2nd largest sector which was sold by the FIIs as they sold
Coal India and Tata Steel. However, due to price movements and MSCI
adjustments the underweight remained unchanged.
Software continued to be the largest underweight sector for the FIIs.
However, the sector saw the highest buying done by the FIIs bringing down
the underweight to the levels of Energy sector.
Consumer sector continued to be the favored sector in terms of FII buying. In
order to move into the defensive names, FIIs bought consumer names. This
has further reduced the consumer U/W for the FIIs.
Telecom was another sector bought by the FIIs during quarter leading to
increase in its O/W.
Telecom was another sector bought by the FIIs during quarter leading to
increase in its O/W.
Key buys in this quarter were: Infy, ITC, TCS, HDFC, HUL and Wipro.
Key sells were: ICICI Bk, L&T, Coal India, Axis Bank and RIL.
Over-Owned/Under-owned Stocks and Sectors
by FIIs
We have updated our analysis of FII holdings to determine the sectors and stocks
that FIIs as a whole are OW / UW on, following availability of the shareholding
pattern as on Dec 31, 2011.
Methodology Recap
Based on FII holdings in individual BSE-500 companies, we calculated an
aggregate FII portfolio in India and their percentage holdings in various stocks
and sectors. We then compared this with the MSCI weight to determine sectors
and stocks that FIIs are O/W/U/W on. One anomaly is in the companies that have
issued ADRs/GDRs. Given that these are also partly held by non-FIIs, we should
ideally have included only the FII holding of GDRs/ADRs in our analysis.
However, since we do not get a separate break-up of the ADR/ GDR holding into
FIIs/ non-FIIs, our analysis may show a higher FII weight in stocks with a high
ADR/ GDR component, than is actually the case
Sector Ownership- U/W on IT & O/W on Industrial fall; U/W
on energy & O/W on telecom rise
Financial: Financials, the biggest O/W sector, once again saw net selling by the
FIIs. FIIs sold popular largecap names such as ICICI Bank (USD 670mn), Axis
Bank (USD 200mn), SBI (USD 120mn) and Shriram Transport (USD 60mn).
However FIIs bought HDFC (USD 150mn), HDFC Bank (USD 80mn) and LIC
Housing Fin (USD 50mn). However, the O/W for the FIIs largely remained
unchanged due to MSCI adjustments and strong performance of non-index
stocks.
Metals & Mining: Metals & Mining was another sector which saw significant
selling. FIIs sold Tata Steel (USD 160mn) and Coal India (USD 300mn). However
due to MSCI adjustments and price movements the U/W for the sector largely
remained unchanged.
Software: Software was the most favored sector by the FIIs and bought heavily.
They bought Infosys (USD 380mn), TCS (USD 250mn) and Wipro (USD 120mn).
Due to this the U/W of the sector has come down during the quarter.
Industrials: Industrials continued to lose favor of FIIs and have turned into an
U/W sector for them. They sold L&T (USD 500mn), BHEL (USD 100mn).
Consumers: Consumer sector continued to find favor from the FIIs and saw the
2nd highest buying done by the FIIs. FIIs bought ITC (USD 350mn) and HUL
(USD 160mn). However they sold Renuka Sugars (USD 50mn). Overall the
heavy buying led to the reduction in the underweight for the sector.
Energy: Energy was another underweight sector which saw significant selling
done by FIIs leading to increase in its U/W. FIIs sold RIL (USD 190mn), Cairn
(USD 50mn). However, they bought ONGC (USD 50mn).
Telecom: Telecom was another sector where FIIs increased their O/W by buying
into Bharti (USD 110mn) and Idea (USD 100mn)
Historical Snapshot of the Sector-Ownership Patterns
Industrials which used to be a big O/W sector for FIIs is now underweight
due to the selling done.
The O/W on the financial sector has remained the highest; however it has
come down sharply from the recent levels.
The U/W on the Energy sector continues to come down, however that is
largely on account of index changes.
Consumer sector is no longer an underweight sector once more largely due
to the buying done during quarters.
U/W on Software continues to come down due to index changes as well as
buying done by the FIIs.
Stocks Over-Owned/Under-Owned
Table 4 details the FII holdings in all MSCI stocks and the extent to which they
are O/W/U/W compared to the MSCI Index. Tables 2 and 3 list the top overowned
and under-owned stocks:
Key Highlights:
There are 3 financial stocks in the top 10 over-owned stocks of the FIIs,
including the top-2. This once again reiterates the FII bias towards the sector.
However FIIs have sold heavily over the last 2 quarters.
FII holding in SBI is now at its lowest. Post the MSCI rebalance SBI is now
part of the top-10 U/W stocks for SBI.
FIIs continue to underweight all the heavyweights like Reliance, Infosys,
HUL, and ITC amongst others.
Software continues to be the largest U/W sector for FIIs with Infy, TCS and
Wipro all part of the top-10 U/W stocks list.
There was 1 change in the top -10 over- owned stock lists by FIIs as Maruti
came into the index replacing United Phosphorus.
What FIIs Bought and Sold
FIIs outlook on Indian markets during the quarter remained negative. They
were bearish on Financials, Commodities and Industrials this quarter.
However FIIs showed interest in defensives like Consumers, IT and
Telecom.
Top buys for the FIIs during the quarter were Infy, ITC, TCS, HDFC, HUL
and Wipro. On the other hand top sells were ICICI Bk, L&T, Coal India, Axis
Bank and RIL.
Domestic Mutual Funds
In contrast to FIIs domestic MF showed interest in the Indian equities with an
inflow of $350mn in the quarter similar to the net inflows of previous quarter. They
continued to be positive on the Indian markets and moved out of defensives like
consumer and telecom while moving into sectors like Software and metals.
Domestic mutual fund portfolio is in stark contrast with that of FIIs, with Industrials
being major overweight sector, sector on which FIIs are only marginally positive.
Consumer Staples is another sector where domestic mutual funds are heavily
overweight in contrast to FIIs who are not. They are also underweight Financials
where FIIs are O/W. However, on the similar lines of FIIs, domestic mutual funds
are also underweight metals & mining sector and Energy sectors.
Industrials continue to be the biggest O/W for domestic MF’s. This O/W for
them got further enhanced on account of heavy buying done in the sector
during the quarter.
In contrast to FIIs, for mutual funds Metals was the one of the sectors where
significant buying was seen. On the other hand, unlike FIIs, they sold
consumer names like ITC and telecom names like Bharti.
On the similar lines of FIIs, MFs also bought software led by Wipro, Infy &
HCL Tech. Like FIIs they also bought cement names.
Pharma and energy were other sectors which were marginally bought by the
MFs whereas utilities and financials saw marginal selling.
Sector Ownership- U/W on metals fall; O/W on Industrials
rise
Industrials: Unlike FIIs, Industrial sector was one of the favored sectors by the
MFs. Domestic MFs bought L&T (USD 300mn) & IRB (USD 25mn). However they
sold BHEL (USD 90mn). The net buying in the sector has increased the O/W for
the domestic MFs.
Metals: Metals & mining sector was also favored by the MFs unlike FIIs. This was
largely led by Hindalco (USD60mn), Tata Steel (USD 40mn) and Sterlite (USD
20mn). This resulted in fall in the U/W of metals sector for the FIIs.
Software: Software was one sector where on the similar lines of FIIs, domestic
MFs bought. The buying was led by Wipro (USD 160mn), Infy (USD 60mn) and
HCL Tech (USD 60mn).
Telecom: Telecom was the highest sold sector by the MFs led by Bharti (USD
100mn) and Idea (USD 50mn).
Promoters
On an overall basis promoter stake in BSE-500 has gone up marginally. In few
cases promoters saw their pledged share come being sold by financial institutions
which reduced their stake. Also few companies would have raised funds by way
of additional issues which decreased the promoter stake. Promoters decreased
their stake in companies e.g. in HFCL, Sujana Towers, IRB Infra Dev, ICSA, Bajaj
Hindusthan and Suzlon Energy amongst others. Promoter stake went up in
companies like Everonn, Cairn India, SpiceJet, and Indiabulls Power amongst
others. In terms of promoter pledges companies with high promoter pledges are
Tata Coffee, Gujarat Pipavav, ICSA India, Pipavav Defence, GTL, and Suzlon
Energy.
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