The foreign institutional investors (FII) ownership in Indian listed firms during the first quarter of 2012 has climbed to its highest level since March 2009.
As per the recent BSE 200 company filings, foreign investors increased their holdings in 128 companies while reducing their stake in the remaining 72 companies. FIIs own 16.4 per cent of the BSE 200 market capitalisation, which represents 36.1 per cent of the free-float market value according to an ownership analysis done by HSBC Global Research.
The domestic institutional investors during the same time have made a significant dilution of their stake as they pared down the ownership in 127 companies and increased their stake in just 63 companies.
“The trend of foreign investors buying Indian companies was seen across sectors — telecom was the only sector with net selling — a reflection of the regulatory muddle the sector is going through,” said HSBC while adding that overseas investors had backed export-oriented sectors such as IT and healthcare as it would help overseas investors reduce their currency risk across the board following the rupee depreciation.
Among the BSE 200 companies foreign investors’ top picks in the quarter ending March 2012 included consumer-backed companies such as Godrej, Tata Motors, Maruti Suzuki, Titan Industries, Jubilant Foodworks, Bharat Forge, and Tata Global Beverages; export-oriented companies such as Wockhardt, Infosys, Mphasis and Lupin and financial companies such as Housing Development Finance Corp (HDFC) and Infrastructure Develop-ment Finance among others.
Though domestic investors have reduced their stakes in nine out of 10 energy companies, their overall stakes in energy companies have gone up because of Life Insurance Corporation (LIC), investment of around `12,000 crore in ONGC during the stake sale of government equity. “DIIs were net sellers of most sectors, except energy and industrials, on growing concerns about domestic economic fundamentals and heightened political risk,” observed HSBC Global.
According CLSA, some trend reversal has already happened since April 1 with $250 million outflows. “We estimate that this would have reduced the FII ownership by 0.2 per cent,” CLSA in its latest India strategy report.