1. Bank bets a crowded trade? FPIs look for value elsewhere

Bank bets a crowded trade? FPIs look for value elsewhere

In a quarter where foreign portfolio investors’ (FPIs) buying activity stood at a five-quarter high...

By: | Published: April 23, 2015 12:10 AM

In a quarter where foreign portfolio investors’ (FPIs) buying activity stood at a five-quarter high, their interest seems to have shifted from the conventional banking and finance to a wide variety of other sectors.

In the March quarter FPIs have raised their stakes in some lesser known companies in the capital goods and realty sectors and picked up substantial stakes in smaller plastic and textile producers. During this period, FPIs bought Indian equities worth about $ 6 billion; their highest purchase in five quarters.

Of the 351 BSE 500 firms that have announced their shareholding pattern for the March quarter, 182 saw a decline in foreign holding. While FPI holdings in 160 companies rose from the earlier quarter, nine firms saw little change.

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Plastic container maker Sintex Industries saw huge interest from FIIs. Overseas holding went up by 8.68 percentage points (ppt) to 28.21% in March quarter, followed by HDIL (7.46 ppt) and Inox Leisure (6.68) While Baring India PE Fund bought 3.27% stake in Sintex, Orange Mauritius Investment bought another 2.87% in the the quarter, Capitaline data show.

Morgan Stanley Asia (Singapore) PTE and Janus Overseas Fund together bought around 4% in HDIL in the March quarter while Merrill Lynch Capital Markets Espana upped their stake by 1.5 ppt.

FPIs also made considerable investment in small textile firms such as Winsome Textile and Winsome Yarns. In the second week of March, Aspire Emerging Fund, managed by the Mauritius-based Vaibhav Investment bought around 10% stake in the open market in both Winsome Yarns and Winsome Textile.

Banking, finance, IT and pharma account for over a third of the 182 firms which saw a decline in foreign holding during the quarter. Barring eight, all banks witnessed a decrease in overseas holding. So far 32 banks have released their equity holding data.

FPIs made a complete exist from L&T Finance by offloading 5.42% stake in the March quarter. Foreign ownership in finance firms such as Manappuram Finance, LIC Housing, M&M Finance, SKS Microfinance and Muthoot Finance reduced anywhere between 2 to 5 percentage points (ppt) in the last quarter of FY14-15. While overseas holding in private lender South Indian Bank come off by 4.18 ppt to 27.91% Federal Bank saw a fall of 3.47 ppt to 35.39%.

In the last one year FPIs have trimmed their holdings in many banking stocks. PSU banks including BoI, Indian Bank, PNB, UCO Bank, IOB, Central Bank, United Bank saw consistent fall in FPI holdings in the last four quarters. The same trend was visible in a few private lenders such as IndusInd Bank and HDFC Bank.

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