FIIs trim stake in 35 Nifty stocks in Q2

A slew of global factors including concerns over economic slowdown in China prompted FIIs to reduce their holdings, said market experts

Foreign institutional investors (FIIs) have reduced their exposure in 35 Nifty companies during the July-September quarter as they recast their portfolio, primarily on account of global factors.

FIIs, on an aggregate basis, holding in the 50-share Nifty has remained flat at 28.6 per cent during the September quarter, according to a  report by ICICI Securities.

Experts said a slew of global factors, including concerns over economic slowdown in China prompted FIIs to reduce their holdings.

“The global risk off environment perpetuated by the turmoil in Chinese markets and the heightened prospects of an early lift-off in US interest rates impacted flows to emerging markets in the September quarter,” the report noted.

Moreover, foreign investors have pulled out more than Rs 18,000 crore from the stock markets during the July-September quarter, higher than over Rs 2,600 crore outflow in the preceding three months.

However, the report said that inflows will improve in third quarter of the current fiscal (2015-16).

According to the report, "key factors that can positively impact FII flows going ahead are: declining volatility in emerging markets, deceleration in the pace of earnings downgrade and expectation of pick-up in growth in the second half of the current fiscal and benign macros-inflation, current account deficit and fiscal deficit."

Of the 50 Nifty companies, FIIs trimmed stake in 35 stocks, while the report did not specify ownership status of the remaining 15 firms.

In comparison, FIIs had reduced their shareholding in 41 firms during the April-June quarter.

"FIIs have trimmed their holding in 35 Nifty stocks (compared to 41 in previous quarter) and of them the reduction was significant (more than two%) in 9 stocks," the report said.

During the second quarter, top FII 'buys' were IndusInd Bank, Indiabulls Housing, Grasim, Nestle and BPCL, while top 'sell' list are TTMT, Axis Bank, Infosys, ONGC and State Bank of India (SBI).

Interestingly, 30% of FIIs holding are concentrated in only five stocks - HDFC, Infosys, HDFC Bank, Tata Consultancy Services (TCS) and Reliance Industries.