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June’11 ownership trends
Our analysis of the shareholding pattern of the BSE-500 companies (combined
market cap US$1.3trn now – 97% of total market cap) reveals that during
2QCY11, FIIs market holding has largely remained flat at 15.2% of overall
market and as of June 30, FIIs remain UWT on all our top 5 ideas i.e. Reliance,
ICICI Bank, M&M, ITC and Dr Reddy’s.
The defensive stance of FIIs has been clear with the proportion of FIIs portfolio
in consumer (staples + discretionary) is now up 1.7ppts during 2Q and now
accounts for 15.6% of the FII portfolios and remains the key overweight. We
note that FIIs are only a marginal 63bps OWT on consumer staples. Even DIIs
also have a near neutral position adjusting for strategic stakes held by UTI and
insurance cos in ITC. While this has raised the staples multiple to close to all
time high, we believe that the sector will continue to attract / retain money
thanks to the comfort of revenue/earnings visibility combined with good
corporate governance.
Both FIIs and DIIs are OWT PSU banks by 3-4ppts. We believe that this
remains the most vulnerable segment of the market with a combination of
OWT and worsening fundamentals. In our model portfolio, we maintain a UWT.
Interestingly, FIIs and DIIs both carry an UWT on private financials – where,
we hold a more constructive view and ICICI Bank is one of our top 5 picks
from India.
IT services remains a key UWT for FIIs and DIIs both. However, we believe
that given the worsening growth outlook in the developed world, IT services is
likely to underperform. We believe that the valuation support is still away.
Energy is the other large UWT for FIIs. Domestic MFs are also U-WT on
Energy, whereas Insurance is an OWT. We believe that the worst is behind for
Reliance Industries and believe that the stock is trading within 5% of the
distressed value. We remains BUYers of RIL.
In our recent strategy roadshow in Asia, we met with several regional investors
with UWT or Neutral weight on India and looking to raise weight on India given
the relative safety of the domestic oriented (and hence relatively more
insulated with a potential slower global growth) economy. This is important
given that 74% of FII investments in India are by multi country funds wherein
India is a part of the portfolio. A potential shift into India by these funds can
potentially bring in significant sums of money into the country and soften the
potential outflow impact.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
June’11 ownership trends
Our analysis of the shareholding pattern of the BSE-500 companies (combined
market cap US$1.3trn now – 97% of total market cap) reveals that during
2QCY11, FIIs market holding has largely remained flat at 15.2% of overall
market and as of June 30, FIIs remain UWT on all our top 5 ideas i.e. Reliance,
ICICI Bank, M&M, ITC and Dr Reddy’s.
The defensive stance of FIIs has been clear with the proportion of FIIs portfolio
in consumer (staples + discretionary) is now up 1.7ppts during 2Q and now
accounts for 15.6% of the FII portfolios and remains the key overweight. We
note that FIIs are only a marginal 63bps OWT on consumer staples. Even DIIs
also have a near neutral position adjusting for strategic stakes held by UTI and
insurance cos in ITC. While this has raised the staples multiple to close to all
time high, we believe that the sector will continue to attract / retain money
thanks to the comfort of revenue/earnings visibility combined with good
corporate governance.
Both FIIs and DIIs are OWT PSU banks by 3-4ppts. We believe that this
remains the most vulnerable segment of the market with a combination of
OWT and worsening fundamentals. In our model portfolio, we maintain a UWT.
Interestingly, FIIs and DIIs both carry an UWT on private financials – where,
we hold a more constructive view and ICICI Bank is one of our top 5 picks
from India.
IT services remains a key UWT for FIIs and DIIs both. However, we believe
that given the worsening growth outlook in the developed world, IT services is
likely to underperform. We believe that the valuation support is still away.
Energy is the other large UWT for FIIs. Domestic MFs are also U-WT on
Energy, whereas Insurance is an OWT. We believe that the worst is behind for
Reliance Industries and believe that the stock is trading within 5% of the
distressed value. We remains BUYers of RIL.
In our recent strategy roadshow in Asia, we met with several regional investors
with UWT or Neutral weight on India and looking to raise weight on India given
the relative safety of the domestic oriented (and hence relatively more
insulated with a potential slower global growth) economy. This is important
given that 74% of FII investments in India are by multi country funds wherein
India is a part of the portfolio. A potential shift into India by these funds can
potentially bring in significant sums of money into the country and soften the
potential outflow impact.
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