Stockmarkets: Where the Greenbacks are Going



A look at where FIIs have invested since the market fall this May by Rachna Monga

Everyone knows that foreign institutional investors (FIIs) have been big sellers in the Indian markets since the meltdown in mid-May. FII net sales have amounted to almost Rs 6,000 crore since May. However, what’s not widely known is that in spite of the broad sell-off in the market, there are quite a few stocks in which the FIIs have either increased their exposure or even made fresh investments. What’s more, the selling has not been uniform across sectors — some of them have escaped the brunt of FII selling. Consider this: of the 1,000-odd companies that have declared their shareholding pattern as of end-June 2006, foreign investors have increased their stake by more than 1 percentage point in 264 of them. On the other hand, there are 108 companies where they have reduced their stake by 1 percentage point or more.
Engineering, construction and infrastructure top the list in the universe of these 108 companies where selling has been concentrated. FIIs have reduced their stake by more than 10 percentage points in IDFC, Mahindra Gesco and SREI Infrastructure Finance. Further, in stocks like AIA Engineering, Praj Industries, Tantia Construction and Triveni Engineering, the FII exposure has come down by 3-5 percentage points. Nonetheless, the real-estate players like Era Constructions, Arihant Foundation and BL Kashyap, and engineering player like Valecha Engineering have also seen their FII holding go up by 6-11 percentage points.In the universe of stocks where FIIs have increased their exposure, there doesn’t seem to be a clear sectoral bias. It’s the banking stocks that figure the most in this list. Federal Bank, Centurion Bank of Punjab and Karnataka Bank have all seen their FII holding go up by 3-10 percentage points. This shows that FIIs have taken advantage of the opportunity to pick up reasonably valued stocks after the May crash. Also, rather surprisingly, the pattern of FII buying indicates that the bias clearly seems to be in favour of the mid-cap and small-cap stocks.
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