The second quarter of the current financial year saw various instances of domestic and foreign portfolio investors (FPIs) taking contrarian bets on sectors such as banking, automobiles, gas distribution and pharmaceutical, among others.
While FPIs reduced their bet on large-cap private banks such as Yes Bank, ICICI Bank, Axis Bank and HDFC Bank, domestic institutional investors (DIIs) increased exposure in majors such as ICICI Bank, Axis Bank and State Bank of India, according to a report by Edelweiss Securities.
Further, companies such as Cipla, Vedanta, Jindal Steel & Power, TVS Motor Company, Britannia Industries, Yes Bank, ICICI Bank, Axis Bank and Hindustan Zinc, among others, also saw significant change in the institutional holding during the second quarter with many witnessing contrarian stance by FPIs and DIIs.
The three-month period between July and September saw FPIs selling Indian shares worth $1 billion even as domestic equity schemes registered robust flows.
“Unrelenting flows into domestic equity schemes [approximately $3.98 billion in July-September quarter] resulted into strong buying by mutual funds in secondary market during this period. However, FII flows continued to be soft with net selling of $1 billion in the aforesaid quarter,” stated the report by the domestic brokerage entity.
ICICI Bank and Yes Bank saw FPI holding fall by 118 basis points (bps) and 300 bps respectively, while the former saw DII stake go up by 174 bps in the second quarter.
Patterns seen gas firms
Another sector where the contrarian stance of FPIs and DIIs was clearly visible was gas distribution. FPIs raised their stake in Indraprastha Gas and GAIL by 103 bps and 132 bps, while Petronet LNG saw the foreign holding go up by 82 bps.
But, DIIs reduced their stake in Indraprastha Gas and GAIL by 56 bps and 115 bps, respectively. Similarly, Petronet LNG saw a dip of 16bps in the DII stake.
Interestingly, firms such as AU Small Finance Bank, Hexaware Technologies, Tejas Networks and L&T Infotech, Mahanagar Gas saw a rise in the holding of both, FPIs and DIIs in the September quarter. South Indian Bank, Jaiprakash Associates, Balrampur Chini Mills and Dish TV India registered a dip in the FPI and DII stake in the second quarter.
The coming quarters could see institutional investors shifting from retail-focused lenders to corporate lenders while allocating higher funds towards public sector banks and pharmaceuticals, said Edelweiss.
