During the December 2021 quarter Foreign Portfolio Investors (FPI) and domestic mutual funds (MF) took opposing viewpoints on the three largest sectors - financials, IT and Energy, global brokerage Jefferies noted in a recent report.
While FPIs cut their weights IT and financials, MFs hiked their stake in these sectors in the December quarter. Similarly, the FPIs raised their weight in energy while the MFs decreased their weight in that sector.
Overall, Jefferies stated that the BSE500 shareholding analysis shows that FPIs have cut their overweight of Financials by 50 bps QoQ. It has reduced around 20-50 bps weight across major financial stocks including HDFC Bank, Axis Bank, Kotak Bank and Indusind Bank during the December quarter. It added that ICICI Bank saw marginally higher FPI stakes QoQ.
Meanwhile, a 70 bps QoQ decrease was seen in IT, partly in line with the global tech sell-off, as FPIs cut their relative positioning in midcap IT names like Mindtree and Mphasis by 30 bps each.
However, FPI weight in the Energy sector increased by around 80 bps mainly due to their improved position in RIL lower, Jefferies further said.
| Sector | FPI Weight (%) | FPI QoQ Change (%) | MF Weight (%) | MF QoQ Change (%) |
| Financials | 32.6 | -0.53 | 32 | 0.27 |
| IT | 17.7 | -0.67 | 13.7 | 0.33 |
| Energy | 9.2 | 0.78 | 6 | -0.07 |
| Consumer | 5.8 | 0.17 | 6 | 0.39 |
| Utilities | 4.3 | -0.21 | 3.1 | -0.53 |
| Healthcare | 5 | 0.47 | 7.1 | 0.11 |
| Industrials | 5.7 | -0.12 | 8.8 | -0.18 |
| Materials | 8 | -0.29 | 10 | -0.3 |
Just in the December quarter, the foreign investors withdrew around $5 billion from Indian equities on the back of rich valuation, US Fed signaling rate high and rise in bond yields.
"The overall market ownership of FPIs (in BSE500 stocks) declined by 90 bps
QoQ to a 7 quarter low of 20.7 percent. FII overweight in stocks outside top 50 declined by 70 bps to 9.1 percent," noted Jefferies. However, the total retail (MFs + direct) participation in the overall market increased by 40 bps QoQ to 17.3 percent. The quarter saw strong inflows from retailers, both through the direct route and also via the MF route, it added.
Now, in the case of MFs, they raised their weight in financials as well as in IT by around 30 bps each while they reduced their weight in energy by 0.1 bps, showed the Jefferies' report.
MFs weightage in Utilities saw a 50 bps reduction, the highest during the December quarter with the change on account of lower weight in Adani group stocks, NTPC and Tata Power. Consumer staples saw an addition of 40 bps by the MFs during the under review.
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