FIIs lead, others follow

After a brief pause they increased stakes in top companies in the September quarter, taking markets to a new high

Foreign institutional investors have increased their effective holding in BSE 200 companies by around 150 basis points to 22.9 per cent in the past 12 months ending September. In the same period, insurance companies were net sellers. Mutual funds (MFs) turned net buyers in the second quarter (July-September), from being sellers in the previous five quarters.

Not surprisingly, the stake increase by FIIs coincided with one of the best stock rallies in three years. The combined market capitalisation of BSE 200 companies was up 42 per cent on a year-on-year basis at the end of September.

The shareholding data suggest FIIs are most bullish on automobiles & ancillaries, followed by banks and financial services. (Click here for tables)

United Spirits saw the highest rise in FII stake in the quarter, followed by Bharti Infratel, MCX, Central Bank, TVS Motor Co and Dr Reddy's Lab. They also increased their exposure in mid-cap information technology and auto ancillaries stocks. The biggest sell-off was Hathway Cable, followed by Strides Acrolab and Crompton Greaves, Andhra Bank and GMR Infra (see adjoining table).

On the other hand, insurance fund managers are most bullish on banks, followed by construction & infra and automobiles, and have cut their exposure to capital goods, energy public sector undertakings (PSUs) and hospitality. Central Bank, ING Vysya Bank and Adani Enterprises were the top pick for insurance companies in the quarter, while Gujarat State Petronet, Voltas and HPCL saw a cut in exposure. Insurance companies were the second largest investors after FIIs, with an effective holding of 6.4 per cent at the end of the second quarter.

 

MFs have broadly kept pace with the two big daddies and have also booked profits at TVS Motor, Mindtree and Motherson Sumi among others. This should not be surprising. All big investors can't be buyers or sellers at the same time. This flexibility is only available to retail investors.