FIIs' portfolio shrinks 67% since Sept '07

The stake held by foreign institutional investors (FIIs) in the top-500 listed companies in India has slumped to a four-year low of 17 per cent in the quarter ended September 2008. The combined stake of FIIs was 20.2 per cent in the year-ago period.

The market value of FII portfolio has fallen by over 67 per cent in a little less than five quarters — from $255 billion in the quarter ended September 2007 to nearly $82 billion on November 21. FIIs began selling in the middle of October 2007 when the Securities and Exchange Board of India (Sebi) first came out with its proposal to curb participatory notes.

“The value erosion can be attributed to selling by FIIs, fall in the market price of the shares they are holding and the fall in the exchange rate of rupee against dollar,” an FII said.

Firms file their equity holding pattern with their quarterly results. Based on this data, Citi group has analysed the equity holding pattern of various classes of investors in companies that figure on the BSE-500 index. These companies account for nearly 95 per cent of the total m-capitalisation.

A comparison of the September quarter data of the past last two years indicates that FII holdings have fallen from 20.2 per cent to 17 per cent. Citi analyst Aditya Narain said that “intuitively, the 24 per cent market drop in October (and accelerated FII outflows) would suggest that the current ownership levels have fallen even further, data for which will be available only in January 2009.”

The market cap of BSE-500 firms as on September-end 2007 was $1,263.37 billion. At 20.2 per cent holding, the market value of the FII portfolio comes to $255.20 billion. This holding has fallen to $136.31 billion in September 2008. During the last two months FIIs have sold shares worth $4.16 billion.