FII holdings just shy of record high

Morgan Stanley says these are 21.6% in top 75 companies, close to all-time high in 2005-06

Foreign institutional investors (FII) seem to have more faith in Indian markets than their domestic counterparts. Apart from their having invested a little over Rs 95,000 crore in the current calendar year, their holdings in the top 75 stocks is near their all-time high level.

FIIs today hold nearly 21.6 per cent of the shareholding of the top 75 companies traded on the National Stock Exchange, a six-year high and marginally lower than the all-time record of 22.1 per cent in mid-FY2006.

According to a Morgan Stanley research report, FII holdings have touched a five-year high in the broader market comprising 1,200 stocks. It says these were, as on September, valued at $240 billion, only marginally lower than the country's foreign exchange reserves.

Interestingly, FIIs seem to be having more faith in Indian companies than the latter’s promoters. Promoters have reduced their stakes to the lowest level in the past nine and a half years. Domestic institutions, too, have reduced holdings in Indian companies.

During the September quarter, the highest buying was seen by FIIs in the energy sector; selling was witnessed in consumer discretionary.

They remain overweight on financials and consumer discretionary, while they are underweight on materials and industrials.

FII holdings in the materials sector are the lowest since March 2001 and in telecom, the lowest since June 2003. Financials have seen the highest buying in the past 12 months.

Among the top 20 stocks owned by institutions, Housing Development Finance Corporation saw the most buying and Infosys was the most sold stock. FIIs are overweight on ICICI Bank and underweight on Reliance Industries.