FPIs, domestic institutional investors show divergent sector preferences
FPIs have cornered the bulk of the free float available in sectors such as private banks, real estate, and insurance.
 "FPIs, foreign investments")
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Illustration: Binay Sinha
Foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) — the two dominant packs of investors — have divergent sector preferences. FPIs have cornered the bulk of the free float available in sectors such as private banks, real estate, and insurance.
Their domestic counterparts, on the other hand, hold more than half of the free float of public sector banks (PSUs), shows an analysis done by Motilal Oswal Securities. Free float is the term used to refer to non-promoter shareholding. FPIs own less than a fourth of the free float of PSU banks.
Shares of state-owned banks have hugely underperformed their private sector peers. Consumer durables and telecom are the other sectors where DIIs dominate. Market observers say both have different considerations when it comes to investing. “DIIs are more concerned about valuations, while FPIs are willing to pay premium valuations if the long-term growth prospects are promising,” said an analyst.
Also, FPIs typically look to invest in large-sized companies and those where there is enough legroom for overseas investments.
Their domestic counterparts, on the other hand, hold more than half of the free float of public sector banks (PSUs), shows an analysis done by Motilal Oswal Securities. Free float is the term used to refer to non-promoter shareholding. FPIs own less than a fourth of the free float of PSU banks.
Shares of state-owned banks have hugely underperformed their private sector peers. Consumer durables and telecom are the other sectors where DIIs dominate. Market observers say both have different considerations when it comes to investing. “DIIs are more concerned about valuations, while FPIs are willing to pay premium valuations if the long-term growth prospects are promising,” said an analyst.
Also, FPIs typically look to invest in large-sized companies and those where there is enough legroom for overseas investments.