New Delhi: With foreign investors pumping a massive $10 billion in Indian markets in January-March , the second highest ever in a quarter, FII ownership in top-500 companies has hit an all-time high of 21.2% for the quarter ending March. It climbed 1.28% in the January-March quarter alone and 2.87% in 2012-13 . Along with foreign promoters (7.6%), foreigners are now the most dominant shareholders in India Inc.
FII inflows topped $25.8 billion during the one-year period ending March 2013, the second best ever. Though FII ownership of India Inc. has hit a peak, their exposure to Indian markets remains well below the highs achieved earlier. The value of FII portfolio stood at $236.2 billion, data compiled by Citi Research and the Centre for Monitoring Indian Economy showed. It hit an all-time high of $276.5 billion at the end of December 2010.
Significantly, foreigners (FIIs and foreign promoters ), with a combined ownership of 28.8% in BSE-500 companies, are now ahead of Indian promoters, who on an average held 27.7% stake in these firms. The churn on the back of Unilever's aggressive open offer to shareholders and promoter stake sales to meet the minimum public shareholding norms stipulated by market regulator SEBI has led to the decline .
FIIs own a quarter of the largest companies in the country. They own 25.32% in sensex companies compared to the average 23.37% owned by Indian promoters in these 30 blue-chip firms. "FII flows would continue as the interest rate cycle has turned favourable," says Kishor P Ostwal, Managing Director , CNI Research, an equities research provider. "It is largely driven by global liquidity ," says Vikram Dhawan , Director, Equentis Capital. Since stock valuations in developed markets are ruling higher, money has started to move into emerging markets such as India, he says.
FII ownership in financial services and consumer staples companies remained high. They have also increased their stakes in energy , telecom and healthcare firms. They have also started to reduce their exposure to IT companies. IT is now the biggest underweight for FIIs, data showed.
FII ownership matters a lot for stock price movement . Stock prices of most companies in which FIIs increased their holdings went up in January-March . All the top companies where FIIs cut their exposure during the quarter witnessed a fall in stock prices. Stock prices plunged 12% to 30% in these companies during the period.
The increase in FII stakes has however failed to move the markets. The markets declined 3% during January-March on the back of heavy selling from domestic institutional investors (DIIs ).
The average stake held by DIIs dropped 0.24% in 2012-13 during which they pulled out about $12.7 billion from the equity markets. "Domestic investors have been facing redemption pressure. But they held rather tenaciously to their ownership levels," market observers said
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