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India Equity Research Reports, IPO and Stock News
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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Post a tepid Q2FY12, overall investment climate remained gloomy in Q3FY12 as well with net institutional inflows of just USD0.2bn (lowest since Q3FY09). Between the peak of the market in Q3FY11 and the trough in Q3FY12, we estimate FIIs have lost more than a third of their equity portfolio in BSE 500, driven down more by declining prices and depreciating rupee, than by actual selling. On sectoral basis, FIIs added more of software and consumer stocks to their portfolio while the DII portfolio has remained fairly stable. On stock specific basis, we estimate FIIs to have added positions in ITC, TCS and Tata Motors while selling ICICI Bank, L&T and Coal India.
FII portfolio erosion: Price, currency aggravate decline
As per data for the BSE 500 index, FIIs have lost more than a third of their equity holdings between the peak in Q3FY11 and the trough in Q3FY12 (from USD210bn to USD132bn). This erosion can largely be explained by the price correction (accounts for ~62% of the decline) and rupee depreciation (accounts for ~38% of the decline) while the impact from actual FII selling has been negligible.
Risk off environment: Institutional ownership of cap goods decline
Poor market sentiments were reflected in the overall institutional flows which at USD0.2bn were the lowest since Q3FY09. For the BSE-100 universe, ownership levels continue to remain steady with FIIs owning ~16.7% and DIIs owning ~12.0%. There seems to be substantial increase in DII ownership of the software sector, but we believe it is due to more of a technical adjustment than actual DII buying. Overall, the general risk–off environment since Q3FY11 has also resulted in a few shifts—the institutional ownership of capital goods sector is now at its lowest point since FY06 while for the consumer sector, it is close to its peak.
FIIs up relative weights in software; DII portfolio remains stable
Within the FII portfolio, the proportion of software sector has increased. This apart, even as they remain underweight vis-à-vis the benchmark, FIIs continue to stack up on the consumer sector. DII portfolio, meanwhile, has remained stable. Their overweight stance on consumer and capital goods has sustained, though the extent in the case of capital goods has declined markedly over the past few quarters.
FIIs shed ICICI bank, L&T, but stock up ITC, TCS and Tata Motors
On an average price basis, we estimate that the highest FII selling in Q3FY12 took place in BFSI, followed by energy, materials and capital goods. Largest buying was in consumers and software. We estimate that ICICI Bank and SBI within BFSI and Coal India and RIL within the energy sector were most sold while ITC, TCS and Tata Motors were among the most bought.
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