Domestic MFs gain ground, FIIs losing the plot

With this, the share of foreign institutional investors shrank to an 11-year low of17.68% during the quarter, down by 51 basis points. One basis point is one-hundredth of a percentage point.

These figures represent the value of shares held by investors as a percentage of the total value of shares of the companies analyzed.

In fact, MFs gained for the third consecutive quarter, driven by robust net inflows of ₹81,539 crore during January-March. The analysis was based on the latest data on shareholding patterns of companies listed on the National Stock Exchange.

Among domestic institutional investors (DII), Life Insurance Corp. of India (LIC), the country’s largest institutional investor, saw its share in 280 companies, where it holds over a 1% stake, increase from 3.64% to 3.75%, sequentially, in Q4 FY24.

Considering that LIC commands a lion’s share of investments in equities among insurance companies, the overall share of insurers also went up during the period. Consequently, the share of DIIs increased from 15.96%  to 16.05% in the quarter ended March.

However, the combined share of retail and high net-worth investors in NSE-listed companies declined marginally by 14 bps quarter-on-quarter.

This narrowed the gap between domestic and overseas investors to an all-time low, with DIIs holding just 9.23% less stakes than FIIs.

“Indian markets are moving towards atmanirbharta (self-reliance) with the share of DIIs set to overtake that of FIIs over the next few quarters," said Pranav Haldea, managing director, PRIME Database Group. 

“For years, FIIs have been the largest non-promoter shareholder category in the Indian market with their investment decisions having a huge bearing on the overall direction of the market. Markets would tank when FIIs would pull out. But not anymore. DIIs, along with retail investors, have played a strong counter balancing role."

The largest gap between DIIs and FIIs was witnessed in the quarter ended 31 March 2015, with DII stakes at a staggering 49.82% lower than FII holdings.

 

A deep dive into primeinfobase.com's ownership data also revealed how FIIs’ investments paid off. Among the 874 companies, where FIIs raised their holdings sequentially, the average stock price rose by 2.84% in the quarter. In comparison, stock prices declined 0.14% on an average for the 665 companies where FII stakes dipped.

In contrast, while the average stock price of the 609 companies where DIIs raised their stakes increased 2.47%, the 577 companies where their stakes declined also rose by 2.35%.

Also read: Midcaps and smallcaps are the talk of the town. Why?

According to industry-wise ownership data, foreign investors raised their investments in consumer discretionary and energy sectors. Their allocations in these sectors rose by 1.24% and 1 percentage point, respectively, in the March quarter. 

However, while FIIs scaled back investments in financial services and fast-moving consumer goods, DIIs increased their allocation by a fair margin in the energy sector.