FII ownership of Sensex stocks at 8-year high

This, even as promoters shed their stake in these companies to the lowest in eight years

The share of foreign institutional investors (FIIs) in Sensex companies is at an eight-year high. Also, promoter stakes in these companies have fallen to the lowest in eight years, according to a Bank of America Merrill Lynch India strategy report.

In March, FII shareholding in Sensex companies stood at 25.3 per cent, compared with 24.5 per cent in the previous quarter. Promoter shareholding dropped from 46.7 per cent in December to 46.5 per cent in March.

During the quarter ended March, FIIs were buyers across the board, according to the report, authored by research analysts Jyotivardhan Jaipuria and Anand Kumar. “FIIs had shown huge interest in the Indian markets during the quarter, buying across sectors. Buying in automobiles, coupled with the exclusion of Maruti from MSCI, led to its overweight increase. Buying in consumer staples was less than its weight in MSCI, and this led to an increase in its underweight. All other changes were largely due to relative price movements,” said the report.

Meanwhile, domestic mutual funds sold across sectors such as finance and automobiles, said the report, adding LIC was a net seller, selling in the software, financial and pharmaceutical sectors.

During the quarter, FIIs were net buyers by $10 billion, while mutual funds were net sellers by $1 billion of Indian equities, according to the report.

Dilip Bhat, joint managing director at Prabhudas Lilladher, said while a pause in FII buying couldn’t be ruled out, the broader buying trend was likely to continue. “There may be some amount of profit-booking, but they will continue to pump in money. The easy monetary policy in Japan, the US and Europe, along with weakness in commodities such as gold and crude, results in money coming into equities,” he said.