DIIs snap at FIIs' heels

Invest Rs 60k cr, up stake to 11% against FIIs’ 12% in FY09.

Domestic institutional investors’ (DII) stake in stock markets have touched close to 11 per cent after they made a record net investment of Rs 60,040 crore during FY09.

According to shareholding pattern filed by 1,660 companies for the quarter ended March 2009, the market share of DIIs in local equity markets has increased to 10.83 per cent in March 2009 from 9.66 per cent in March 2008.

The combined market share of DIIs, which include insurance companies, banks, financial institutions and mutual funds, in the Indian stock market has inched close to that of foreign institutional investors (FIIs), which hold around 12 per cent share of the total market capitalisation of actively-traded stocks on the Bombay Stock Exchange (BSE).

FIIs who pulled out Rs 73,231 crore between April 2008 and March 2009, have seen their market share drop to 12.46 per cent during March 2009 from 14.81 per cent in March 2008. These 1,660 firms accounted for 81 per cent of the total market capitalisation of the BSE.

The Sensex during the period has declined 38 per cent, from 15,644.44 on March 31, 2008, to 9,708.50 on March 31, 2009. FIIs, who had invested $13 billion (Rs 68,407 crore) in FY08, have sold almost $12 billion of the Indian stocks in FY09.

FIIs’ ownership in 46 companies, part of the Sensex and the Nifty, declined to 14.79 per cent in March 2009 from 16.93 per cent in March 2008 and 18.34 per cent in March 2007.

On the other hand, DIIs, who hold close to 10 per cent stake in equity markets, have increased their share in these companies from 9.5 per cent in March 2007 to 11 per cent in March 2008 and further to 12.2 per cent in March 2009.

The gap between FIIs and DIIs is narrowing now. FIIs have been gradually reducing their commitment to the Indian equity markets in the backdrop of sub-prime crisis.