Reliance Industries finds favour among FIIs, but DIIs pare holdings in Q3

Written by fe Bureau | Mumbai | Updated: Jan 14 2014, 07:09am hrs
RILThe rise in the FII holding comes at a time when DIIs marginally reduced their holding from 11.84% in previous quarter to 11.46% pct. Reuters
Reliance Industries (RIL), the second biggest company in terms of market capitalisation, saw foreign institutional investors (FIIs) holding rise to 18.26% in the quarter ended December 31, 2013. In the previous quarter, FII stake in the company stood at 17.69%.

The rise in the FII holding comes at a time when domestic institutional investors (DIIs) marginally reduced their holding from 11.84% in previous quarter to 11.46%. Keeping in line with the DIIs, retail investors have also pared their stake marginally from 10.35% to 10.2%. Overall, the total public shareholding in RIL has come down to 51.18% from 51.27% in previous quarter.

Incidentally, the third quarter of the current financial year (FY14) saw foreign institutional investors putting in $6.5 billion in the Indian equity market even as their domestic counterparts sold equities worth $4.7 billion.

Analysts, meanwhile, expect RIL shares to gain further ground in the near future as the Cabinet Committee on Economic Affairs (CCEA) approved higher price for gas produced from RILs KG-D6 basin. We believe the Cabinet decision clearing the uncertainty on pricing of gas produced at KG-D6 is a key positive as this would likely end the political debate around the D6 gas price increase, allowing the market to focus on the companys strong medium-term earnings growth prospects, said Goldman Sachs in a recent research report. The scrip has gained 2.86% since the CCEA took the decision on December 19. Meanwhile, the stock gained 6.64% in 2013.

Brokerages feel the exploration and production (E&P) sector could see increased flow of investments, going ahead. We believe that the E&P sector is poised to revive, and the present action as well as imminent notification of the gas price hike to the firms could convince many fence-sitting investors of incumbent growth, added Macquaire in a recent report.