FII holdings in Indian cos down to 2003 level

FII holdings in Indian cos down to 2003 level
The Times of India, February 13, 2009, Page No. 21

Domestic Institutions Hike Stakes, Surpass Retail Players

MUMBAI: Foreign investors, the most influential investor group in the Indian market, have reduced their holdings in Indian companies drastically in the last four quarters and are back to their December 2003 holding levels. However, domestic institutional institutions (DIIs), led by insurance companies, have cushioned part of the FII exodus. And now, for the first time ever, DIIs own more than what retail investors hold in Indian companies, an analysis by a Citigroup arm of the latest disclosed shareholding patterns showed.

The report also pointed out that for the first time in four years, DIIs and retail investors, that excludes promoters, own more than FIIs. In BSE 500 stocks, which make up for 94% of the all BSE listed companies, DIIs now hold 8.86%, while retail investors hold 8.64%. Retail investors, who were holding 16.4% of the BSE 500 companies in March 2001, have mostly been shedding their positions since then.

Sebi data also shows that in 2008, FIIs took $13 billion (Rs 54,500 crore) out of the Indian market, a trend reversal from a $17 billion (Rs 72,700 crore) net inflow in 2007. Compared to this, DIIs -- which include mutual funds, insurance companies, banks and other financial institutions -- pumped in nearly Rs 14,000 crore in 2008, more than double the Rs 6,400 crore they had invested in 2007.

The Citi report titled ‘Back to...2003' said the last quarter's sell-off, when about 1.4% of FIIs holdings were sold, brought it down to 15.5%, the same level where it was five years ago. This is the same level where it was during the early days of the last bull market. In value terms, foreign ownership is still higher at $94 billion than in December 2003, ‘‘but the level is almost of an age gone by,'' the report said.

The landmark shift in ownership data, showing DIIs holding more than the combined holding of retail investors, could also be a sign of a maturing market. ‘‘Domestic investors (ex-promoters) now collectively own more than foreigners for the first time in four years. The big gainers continue to be the insurance companies who now own 5% of India Inc,'' the report said.

Foreign funds are known to concentrate their holdings in blue chips and the latest data corroborates the same. As of last quarter, FIIs held 22.5% in the 30 sensex stocks, while retail investors held 8.6%, insurance companies 6.4% and mutual funds 4.1%.