Quarterly changes in Institutional ownership. Latest data released for
the March quarter indicates that FIIs increased their ownership of Indian
equities by a significant 120 bps, while DIIs reduced their holdings by a
marginal 10 bps. Current FII ownership at 18.6% is at an all time
high. Insurance holdings of Indian equities at 5.6% have been reducing
over the last four quarters. Mutual fund holdings at 3.5% are well off the
highs though. Sectoral trends were mixed across the investor categories.
Portfolio positioning. Currently FIIs are overweight on Financials,
Consumer Discretionary and Telecom. They are underweight IT Services,
Energy and Industrials. DIIs are currently overweight Consumer staples
and Energy. DIIs are underweight Financials, Consumer Discretionary
and Health Care sectors.
J.P. Morgan portfolio stance – Our portfolio stance is biased toward
high-quality Financials, Energy, IT services, Health Care and state
owned utilities.
Indian equities - hot but vulnerable. India has been the preferred
destination for FII inflows over the recent past (YTD, US$11.5 bn in
equity flows). FII ownership of Indian equities is at an all time high.
Latest available EPFR data indicates that FII's overweight position on
India is at a six year high. From a technical perspective 1) this position
highlights the vulnerability of India to a global risk off trade. The
vulnerability extends to the currency as well - the large CAD is being
funded mainly by capital flows and 2) underscores the need for the
Government to ensure growth revival.
RBI cuts Repo Rate by 25 bps, but strikes a cautious guidance. Our
Economists believe that we are nearing the end of the mini easing cycle
and expect only one more cut of 25 bps in July. Liquidity remains tight,
making lending rates sticky. We maintain that there are transmission
challenges in reducing lending rates over the near term.
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the March quarter indicates that FIIs increased their ownership of Indian
equities by a significant 120 bps, while DIIs reduced their holdings by a
marginal 10 bps. Current FII ownership at 18.6% is at an all time
high. Insurance holdings of Indian equities at 5.6% have been reducing
over the last four quarters. Mutual fund holdings at 3.5% are well off the
highs though. Sectoral trends were mixed across the investor categories.
Portfolio positioning. Currently FIIs are overweight on Financials,
Consumer Discretionary and Telecom. They are underweight IT Services,
Energy and Industrials. DIIs are currently overweight Consumer staples
and Energy. DIIs are underweight Financials, Consumer Discretionary
and Health Care sectors.
J.P. Morgan portfolio stance – Our portfolio stance is biased toward
high-quality Financials, Energy, IT services, Health Care and state
owned utilities.
Indian equities - hot but vulnerable. India has been the preferred
destination for FII inflows over the recent past (YTD, US$11.5 bn in
equity flows). FII ownership of Indian equities is at an all time high.
Latest available EPFR data indicates that FII's overweight position on
India is at a six year high. From a technical perspective 1) this position
highlights the vulnerability of India to a global risk off trade. The
vulnerability extends to the currency as well - the large CAD is being
funded mainly by capital flows and 2) underscores the need for the
Government to ensure growth revival.
RBI cuts Repo Rate by 25 bps, but strikes a cautious guidance. Our
Economists believe that we are nearing the end of the mini easing cycle
and expect only one more cut of 25 bps in July. Liquidity remains tight,
making lending rates sticky. We maintain that there are transmission
challenges in reducing lending rates over the near term.
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