DIIs raise stakes in 70% of Nifty 50 firms in Q3 even as FPIs prune big

FPI allocation to BFSI companies in Nifty 500 declines to 20-quarter low

Domestic institutional investors (DIIs) raised their stakes in 70 per cent of companies that are part of the Nifty50 in the third quarter of financial year 2021-22 (Q3FY22). Foreign portfolio investors (FPIs), on the other hand, reduced their holdings in 74 per cent of these companies.

Tata Motors, Maruti Suzuki, and NTPC saw the highest increase in FPI holding, whereas Axis Bank, IndusInd Bank and Hero MotoCorp saw the biggest decline during the quarter.

DII holdings rose the most in IOCL, Axis Bank, and Hero MotoCorp. NTPC was the only stock that saw DII holdings decline more than 1 per cent sequentially.

FPI holding in Nifty500 firms declined 60 basis points (bps) in Q3 to 20.9 per cent, even as DII holding climbed 20 bps during this period. FPIs reduced their ownership in 53 per cent of Nifty500 companies sequentially, while DIIs increased their stake in 53 per cent of Nifty500 companies.

Within the Nifty500, FPIs had the highest ownership in private banks (46.1 per cent), followed by NBFCs (29.7 per cent), insurance (22.9 per cent), oil and gas (22.6 per cent), and technology (19.8 per cent). DIIs had the highest holdings in private banks (23 per cent), capital goods firms (20.5 per cent), PSU banks (17.9 per cent), consumer durables makers (16.9 per cent), and metals firms (16.7 per cent).

Among sectors, FPIs had the highest allocation to firms in the BFSI space, though it declined for the fourth consecutive quarter to 35 per cent, a 20-quarter low. Technology (14.7 per cent) and oil and gas (10.9 per cent) were the other two sectors where FPIs had the most weight. The top three sectoral holdings for DIIs in the Nifty500 were BFSI (27.3 per cent), Technology (11.8 per cent) and oil and gas (9.7 per cent).

Relative to the Nifty500, FPIs were significantly overweight in private banks/NBFCs and underweight in firms in the consumer, capital goods, and metals spaces, and PSU banks. DIIs were significantly overweight on PSU banks, metals firms, capital goods makers, automobile manufacturers, and consumer, while being underweight in technology, NBFCs, and private banks.

As a proportion of the free-float of the Nifty500, FPI ownership decreased 110 bps sequentially to 42.2 per cent, while DII ownership increased 50 bps to 28.2 per cent. Year-on-year, FPI ownership declined 220 bps, whereas DII ownership dipped 10 bps. The FPI-DII ownership ratio in the Nifty500 declined to 1.5x in Q3FY22 from 1.6x in the year-ago period. Over the last one year, the FPI-DII ratio has increased in sectors such as consumer durables, utilities, chemicals, technology, and telecom.

FPI holdings as a percentage of free-float holdings were higher than 50 per cent in Nifty500 companies in the real estate sector, insurance, private banks, and NBFCs at the end of Q3.

DII holdings were the highest in PSU banks (52 per cent), followed by telecom (35 per cent), consumer durables (35 per cent), and metals (35 per cent).