DII Trends: 54% Q1 inflows driven by just 3 sectors; top 10 stocks form 38% of total holdings

54 percent of domestic institutional investor (DIIs) inflows in the June quarter of FY23 (Q1FY23) were driven just by three sectors, domestic brokerage house Motilal Oswal stated in an analysis of the sectoral trends of DIIs for the June quarter.

According to MOSL analysis, DII inflows in Nifty500 stood at $17.1 billion in the first quarter of FY23.

The report further pointed out that the sector that recorded the highest inflows was Private Banks at $3.8 billion in Q1FY23. The technology sector was the second sector with the highest DII inflows in Q1 at $3.3 billion. It was followed by the NBFC space, where DII inflows in Q1 stood at $2.3 billion, highlighted the report.

According to Motilal Oswal, flows in Insurance, Retail, Utilities, Infrastructure, and Textiles remained weak. Unlike FIIs, DIIs recorded strong inflows in Private Banks, Technology, and NBFCs, it added.

The report had also noted that these three sectors witnessed the highest FII outflows in the quarter under review. The sector that recorded the highest outflows was Technology at $4.2 billion in Q1FY23 followed by Private Banks with FII outflows in Q1 at $3.8 billion and NBFC space, where FII outflows in Q1 stood at $2.5 billion. Oil & Gas and Metals also saw high FII outflows during the June quarter, the brokerage informed.

The report further stated that during the last three quarters, DIIs recorded inflows of $43.5 billion from Nifty500; of this, Private Banks topped with inflows at $10 billion, followed by Technology with inflows at $6.7 billion, and NBFCs at $5.7 billion.

Anatomy of DII holdings

As per MOSL, the total value of DII holdings in India stood at $448 billion as of June 2022. Nifty formed two-thirds of these holdings, while Nifty-500 accounted for 97 percent share, informed the report.

On a sectoral basis, at $68 billion, Private Banks accounted for 15.2 percent of the total market value of DII holdings as of June 2022, highlighted the brokerage.

Including NBFCs, PSU Banks and Insurance, financials formed 27.4 percent of the total DII holdings. The weightage of NBFCs in total DII holding stood at 7.1 percent while that of PSU Banks and Insurance were 3.7 percent and 1.4 percent, respectively, stated the brokerage.

After financials, Oil & Gas was the second sector that accounted for the highest market value in DII holdings at $48 billion, followed by Technology at $44 billion, Consumers at $44 billion and automobiles at $32 billion, noted the brokerage. Cumulatively, these five sectors contributed 64.8 percent to the total DII holdings in India, it added.

In the consumer space, ITC alone accounted for 43 percent of the total holding, it further stated.

Meanwhile, the brokerage informed that Nifty50 stocks form 70 percent of total FII holdings in India while Nifty500 accounts for 98 percent share.

As of June 2022 and on a sectoral basis, Private Banks accounted for 20.1 percent of the market value of FII holdings followed by oil and gas, and technology.

Top-10 stocks form 38 percent of total FII holdings

DII holdings seem relatively less concentrated versus FII holdings, noted MOSL. The top-25 stocks account for 55 percent of the total DII holdings with the top-10 stocks alone accounting for 38 percent.

Meanwhile, in FIIs, the top-25 stocks account for 62 percent of total India holdings with the top-10 stocks alone accounting for 46 percent, said the brokerage.

Reliance Industries is the single largest holding of DIIs with $32.7 billion market value, informed the brokerage. The other stocks in the top-10 holdings are ICICI Bank, HDFC Bank, ITC, Infosys, SBI, TCS, HDFC, Bharti Airtel, and L&T, it highlighted. The HDFC twins – HDFC Bank and HDFC Ltd – form 7.2 percent of the total DII holdings in terms of market value, added the brokerage.

Among FIIs, the brokerage said that the HDFC twins – HDFC Bank and HDFC Ltd – the top two FII positions in India, form 13.5 percent of total FII holdings in terms of market value. The rest eight stocks in the top-10 holdings are Reliance Industries, ICICI Bank, Infosys, TCS, Kotak Mahindra Bank, Axis Bank, Bharti Airtel and HUL, added the brokerage.