As foreign portfolio investors (FPIs) have increased their holding in the domestic stocks, domestic institutional investors (DIIs) have been net sellers, and their stake in Nifty-500 stocks declined to a seven-quarter low of 14.3 per cent in the March 2021 quarter, shows a brokerage analysis.
On an annualised basis, the overall FPI ownership in Nifty-500 stocks rose 160 bps to 22.3 per cent in the March quarter from 20.7 per cent in March 2020, while that of DIIs declined 50 bps to 14.2 per cent from 14.7 per cent in March 2020.
On a quarterly basis, the same FPIs saw a 20 bps decline from the December 2020 quarter, and DIIs witnessed decline by 10 bps, show data from domestic brokerage Motilal Oswal Financial Services.
In the March quarter, while foreign portfolio investors pumped in USD 7.3 billion into domestic equities, domestic institutional funds pulled out heavily with a net outflow of USD 3.2 billion. It indicates that vastly divergent sequential trends are seen between FPI and DII purchases of equities, according to the report.
While FPIs increased weights in two-thirds of the sectors (telecom, metals, consumer durables, realty, and cement), DIIs trimmed weights on these sectors in particular and the overall market in general between the December and March quarters.
While the overall FPI ownership in Nifty-500 grew 160 bps year-on-year to 22.3 per cent, which is at the pre-pandemic levels in the fourth quarter of 2020-21, the same saw a marginal 20 bps dip in the quarter-on-quarter.
On the other hand, DII holdings in the Nifty-500 were down 10 bps quarter-on-quarter between March and December, and a larger 50 bps down year-on-year to 14.2 per cent, the report said on Wednesday.
Between December 2020 and March 2021, FPIs increased their holding in 286 of the Nifty 500 index, and in 32 of the Nifty 50 index. The same for DIIs was only 217 and 19 stocks, respectively, and FPIs paired their stake in 203 and 18 stocks, respectively, and for DIIs it was 271 and 31, it added.
FPIs increased their ownership in Nifty 500 stocks to 57 per cent in March and to 64 per cent in Nifty 50 stocks in the December 2020 quarter. On the other hand, DIIs paired their stakes to 56 per cent and 62 per cent, respectively, during the same period, according to the report.
The FPI-DII ownership ratio in the Nifty 500 remained at 1.6 times in the fourth quarter of 2020-21, which though is unchanged from the previous quarter, but was up from 1.4 times in the March 2020 quarter.
In terms of absolute holdings, of the total FPI holdings of USD 593 billion, private banks are at the top with USD 139 billion in investment value.
On the other hand, of the total DII holdings of USD 378 billion in the Nifty 500, private banks are at the top with USD 59 billion, followed by technology with USD 43 billion and consumer with USD 40 billion.
While FIIs had their highest quarter-on-quarter holding in telecom, metals and consumer durables, DIIs had it in consumer, healthcare and state-owned banks.
In the Nifty 500, FIIs have the highest ownership in private banks (47.9 per cent), followed by NBFCs (32.9), oil and gas (23.1), insurance (22.2) and real estate (21.5).
DIIs have the highest ownership in capital goods (21.9 per cent), private banks (20.4), metals (18.3), consumer durables (17.8), and PSBs (17.6).
While FPIs raised stake in 64 per cent of Nifty 50 companies, DIIs reduced in 62 per cent of Nifty 50 stocks. The only stocks where DIIs increased the holding the most (by over 1 per cent) were BPCL, Bajaj Auto, Indusind Bank, and SBI Life Insurance.