QFIs begin India play with blue-chips, buy RIL, TCS shares

QFIs hold the maximum number of shares in ITC, followed by Power Grid, Bharti Airtel and HDFC Bank

Qualified Foreign Investors, a newly created category for simplified investment process for overseas entities, have put their bets on large blue-chips like Reliance Industries, TCS, ITC, SBI and HDFC Bank for their initial investments into the country.

As per the latest shareholding data disclosed by the top 100 blue-chip companies in terms of market value for the July-September quarter, the QFIs hold the maximum number of shares in ITC (13,088), followed by Power Grid (7,148), Bharti Airtel (3,827) and HDFC Bank (2,874).

They also hold 1,816 shares in Hindustan Unilever, 1,157 shares in Reliance Industries, 685 shares in TCS, 415 shares in SBI and 229 shares in Infosys.

At current market prices, these shares are worth a combined Rs 1.19 crore and apparently indicate that QFIs have made a rather cautious beginning. There were no records of QFI investments in these counters in April-June quarter.

Data from the BSE shows that there are just nine companies that have records of QFI investors among the top 100 companies by market capitalisation.

A qualified foreign institutional investor (QFI) is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs do not include FIIs/sub-accounts.

Foreign investors are allowed to invest directly through QFI route in stocks, mutual funds and corporate bonds through demat accounts opened with Sebi-registered Depository Participants, after meeting KYC (Know Your Client) norms applicable in the Indian markets.

With an aim to attract foreign investors from a larger number countries through QFI route, market regulator Sebi has decided to sign bilateral MoUs with its counterparts in at least six countries.

At the same time, Sebi will request the market regulators across various countries to allow the Indian market intermediaries operating in their jurisdictions to solicit business from interested QFIs at those places.

The steps are being taken by Sebi pursuant to suggestions made by the Ministry of Finance in this regard and would help attract more overseas investments through the QFI route.

The QFI framework was first put in place about a year ago and individuals, groups or associations from 45 countries, including  Australia, Canada, France, Germany, Hong Kong, Japan, Singapore, Switzerland, UAE, UK and the US, are at present eligible to invest through the QFI route.

However, the absence of an MoU between Sebi and the respective regulators in seven other countries (Argentina, Republic of Korea, Turkey, Kuwait, Qatar, Ireland and Latvia) make the entities in those jurisdictions ineligible to put money as QFIs into the Indian capital markets.