Foreign investor holding in the Nifty500 index fell 40 basis points (bps) on a quarter-on-quarter (QoQ) basis and 210 bps on a year-on-year (YoY) to 20.3 percent in the March quarter of FY22 (Q4FY22), a report by Motilal Oswal noted. This was the lowest holding by FIIs in the Nifty500 index since March 2017 quarter.
Nifty500 is an index tracking top 500 companies listed on the National Stock Exchange (NSE).
However, contrary to the foreign investors, the domestic investor holding or DII holding in Nifty500 rose 70 bps QoQ and 30 bps YoY to 14.5 percent in Q4FY22, the highest since March 2020 quarter.
As per the MOSL report, FIIs reduced their ownership in 60 percent of the Nifty500 companies and 72 percent of the Nifty50 firms on a QoQ basis while DIIs raised their stake in 58 percent of the Nifty500 firms and 72 percent of the Nifty50 companies in this period.
The report also noted that the FII-DII ownership ratio in the Nifty-500 declined to 1.4x in 4QFY22 (from 1.6x in 4QFY21).
"Over the last one year, the FII-DII ratio has increased in Utilities, Metals, Consumer Durables, and Capital Goods, but has decreased in Insurance, Real Estate, NBFCs, Private Banks, Retail, Automobiles, Healthcare, Cement, Telecom, and Oil & Gas," it added.
As per Central Depository Services Ltd (CDSL), foreign institutions have sold a total of ₹24,530 crore in the current financial year so far. Last year, they sold over ₹1.22 lakh crore worth of stocks.
This is important to note as India is now world's sixth largest stock market with a total market capitalisation of ₹3.4 lakh crore as of October last year.
In the Nifty500 FIIs have the highest ownership in Private Banks at 45.2 percent, followed by NBFCs at 27.4 percent, Oil & Gas at 22.6 percent, Insurance at 20.5 percent, and Technology at 19.2 percent, said the report.
However, on a QoQ basis, FIIs increased their stakes in Metals (+130bp), Telecom (+70bp), Utilities (+50bp), PSU Banks (+30bp), and Chemicals (+10bp).
Conversely, they reduced their stakes in NBFCs (-190bp), Insurance (-120bp), Cement (-110bp) Private Banks (-110bp), Consumer Durables (-90bp), Retail (-70bp), Capital Goods (-70bp), Automobiles (-70bp), Real Estate (-60bp), Technology (-40bp), Consumer (-30bp), Healthcare (-20bp), and Oil & Gas (-10bp), noted the report.
Meanwhile, DIIs saw a maximum increase in stake of Telecom (+130bp), Private Banks (+110bp), Consumer (+110bp), NBFCs (+90bp), Consumer Durables (+90bp), PSU Banks (+80bp), Healthcare (+80bp), Insurance (+70bp), and Cement (+60bp) on a QoQ basis, informed MOSL.
On the other hand, DIIs reduced their stake only in one sector – Capital Goods (-20bp) in this period.
Banking, financial services and insurance (BFSI)’s underperformance has continued to reflect in FII allocation – down to 34.2 percent, at a multi-quarter low in the Nifty500 as of March 2022 quarter, from 40.1 percent in March 2020 quarter, added MOSL.
"This resulted in the FII weight in BFSI declining 60 bp QoQ. However, FIIs still remained significantly overweight by 570bp in BFSI v/s the Nifty-500 (BFSI’s weight in the Nifty-500 currently stands at 28.5 percent)," said the brokerage.
BFSI was followed by Technology in which FIIs had 14 percent weight and Oil & Gas. Overall, the Top 5 sectoral holdings of FIIs in the Nifty-500 accounted for 72 percent of total allocation – BFSI (34.2 percent), Technology (14 percent), Oil & Gas (12.2 percent), Consumer (6.7 percent), and Healthcare (4.8 percent).
FIIs were significantly overweight (v/s Nifty-500) on Private Banks/NBFCs and underweight on Consumer, Capital Goods, PSU Banks, and Metals. They increased their weights in Oil & Gas, Utilities, Metals, Private Banks, Telecom, Chemicals, and PSU Banks, while reducing their holdings in NBFCs, Technology, Healthcare, Consumer, Insurance, Cement, Consumer Durables, Retail, Automobiles, and Capital Goods, sequentially.
Meanwhile, DIIs were overweight on PSU Banks, Metals and underweight on Technology, NBFCs.
The report further noted that a mixed trend was observed in promoter holdings. The holdings remained unchanged on a QoQ basis, but rose 60 bps YoY to 50 percent, it stated.
Promoter stakes in Restaurant Brands Asia, Max Healthcare, Coforge, Equitas Small Finance Bank, Poonawalla Fincorp, and JK Cements declined QoQ due to stake sale and capital raising exercises. Conversely, Sterling & Wilson Renewable Energy, CG Power & Industrial Solutions, Dhani Services, Vodafone Idea, and L&T Finance Holdings witnessed a QoQ increase in promoter stakes, it added.