Updated on: Thursday, May 28, 2020, 09:41 PM IST

TejiMandi Newsletter: DII holdings at a five-year high -- signs of growing equity cult?


One can sense a clear change in sentiments. It's everywhere. With more and more people shedding their fear, market places are promising to be back to its vibrant self soon. Stock market is one mirror that reflects these sentiments and a change of mood (though it's early) is visible here.

Indian market closed the May series on quite a strong note after falling as low as 8,800 for the month. Intraday, Sensex gained 1.88% to close at 32,200.59 while Nifty closed 175 points higher at 9,490.10.

What's quite heartening to see is the reduced volatility in the market. India Vix dropped more than 3% intraday to 30.28 which is significantly lower than its 30 days average of 39.45 and 50 days average of 50.26.

Sentiments across the global markets are improving as countries across the globe are emerging out of the lockdown. In India as well, significant relaxations are issued on lockdown and the economy is limping back to normalcy.

Performance of the benchmark indices has been negative so far in CY20, in tandem with global equity markets. Interestingly, A careful study reveals how stock holding pattern has changed in India over the last five years.

The study reveals that FII holding in India, at the end of Q4, was at a 5-year low while DII holding reached its peak for the same duration. DII holding has increased to 16.4% on March 20 from 11.3% on March 15 while FII holding in Indian stocks has reduced to 25.5% from 28.1%, five years ago.

Sector-wise, Consumers, Technology, Healthcare and Telecom have emerged as favorites where both the FIIs as well as DIIs have increased their holdings in the March ending quarter.

Among the Nifty 500 universe, Private banks continue to form the core for both types of investors. For FIIs, out of total holding of USD310b, Private Banks are at the top with USD72b investment value while for DIIs, out of the total DII holding of USD218b, Private Banks are at the top with USD33b worth investment.

Key takeaway:

In simple words, this development points at the growing equity cult in India. More and more national saving is being deployed in the stock market, either via mutual funds or in the form of direct equity. As a result, DII holding in Indian stock market has now reached a 5-year high.

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Published on: Thursday, May 28, 2020, 09:41 PM IST