FPIs, MFs lap up blue-chips; stake in RIL, IndusInd Bank at record high

Foreign portfolio investors and mutual funds have been lapping of stocks of blue-chip companies in the January – March 2018 (Q4FY18) quarter with their stakes in select companies hitting an all-time high. 

FPIs ownership in 13 companies from the S&P BSE200 index, such as Reliance Industries (RIL), IndusInd Bank, UltraTech Cement, Ashok Leyland and ICICI Prudential Life Insurance hit record high at the end of Q4FY18, CapitalinePlus data shows. Mutual funds’ combined stake in S&PBSE 200 companies, too, hit an all-time high of 6.3 per cent during the recently concluded quarter, up 30 basis points (bps) quarter-on-quarter.

An analysis of 200 companies that filed shareholding pattern for Q4FY18 suggests the FPIs increased their stake in 71 firms, while their holding declined in the remaining 129 companies as compared the year ago period. The S&P BSE 200 index accounted for 76 per cent of the market capitalisation (market-cap) of all BSE listed companies.

Larsen & Toubro (L&T), Ashok Leyland, Escorts, Jubilant FoodWorks, Axis Bank, Amara Raja Batteries, Tech Mahindra, Mindtree, InterGlobe Aviation and Divi's Laboratories  are some of the other scrips that caught FPI’s fancy during the recently concluded quarter, data from CapitalinePlus shows.

“FPIs have been investing in large-caps and chasing growth. Whenever we see an increase in exchange traded fund (ETF) flows into the markets, it is generally the large-caps with good growth prospects that attract investors. Going ahead, foreign and domestic flows will get continue to get concentrated where there is visibility in earnings and a growth potential,” explains Rajat Rajgarhia, chief executive officer (institutional equities) at Motilal Oswal Securities.

FPIs made a net investment of Rs 136 billion ($2,125 million) during Q4FY18 in the markets, while mutual funds put in a net Rs 338 billion during the same period, data shows.

Sector-wise, FPIs hiked their holding in agri-related stocks, private banks, information technology (IT), non-banking financial companies (NBFC), cement, fast moving consumer goods (FMCG) and in select steel and pharmaceutical companies.

Their holding in RIL hit a new high of 23.81 per cent in March quarter (Q4FY18) from 23.55 per cent at the end of December 2017 quarter (Q3FY18). This is the 10th consecutive quarter when the FPIs hiked their stake in the Mukesh Ambani-controlled company. 

“Mid-and small-cap segments, but nature, are volatile and foreign investors prefer stability, earnings visibility and growth potential. As a result, they have been chasing the large-caps. Among the lot, I feel RIL can still attract flows given that there is room for expansion in earnings going ahead,” says G Chokkalingam, founder and managing director at Equinomics Research.

For Q4FY18, Jal Irani, an analyst tracking the sector with Edelweiss Research expects RIL to report a two per cent increase in profit after tax (PAT) to Rs 86.5 billion when it announces its results in post market hours on Friday. 

“We expect 5 per cent lower refining EBIT q-o-q with GRM of $11.1/bbl. Petchem earnings are likely to improve 11 per cent as new capacities ramp up in addition to robust cracker and polymer margins,” he says.

Companies in the Tata group also caught their attention with the FPIs hiking their stake in Tata Consultancy Services (TCS), Tata Steel, Tata Global Beverages, Tata Power Company and Tata Communications in the range of 1 per cent to 2 per cent, data shows.

	Stake in %
Quarter ended	FPIs	MFs	Insurance companies
September, 2016	22.2	4.4	5.5
December'2016	21.5	4.7	5.7
March'2017	21.8	4.9	5.5
June, 2017	22.2	5.3	5.5
September, 2017	22.0	5.7	5.3
December'2017	21.8	6.1	5.4
March'2018	22.0	6.3	5.3
FPI - Foreign portfolio investors
MF - Mutual Funds
Ownership pattern of S&P BSE 200 companies
Source: CapitalinePlus
Data compiled by BS Research