MFs press exit button on Indian equities in July-Sept

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Ankit Doshi: Mumbai, Nov 23 2012, 03:01 IST

Much in contrast to the buying appetite of foreign institutional investors (FIIs), domestic fund houses have been busy offloading Indian equities in the past few months. According to Capitaline data, 62 companies in the BSE 100 universe have witnessed a sequential drop in mutual fund shareholding in the September quarter.

Further, average MF shareholding of these 62 companies — the arithmetic mean of company stakes held by foreign institutions — decreased 0.4 percentage points (40 bps) quarter-on-quarter in September. Companies to have witnessed a sharp fall in MF shareholding include Power Finance Corporation (2.65 percentage points), Divi's Laboratories (1.44 percentage points), United Spirits (1.16 percentage points) and ICICI Bank (0.94 percentage points).

“In contrast to FIIs — who showed huge interest in the Indian markets during the quarter — domestic MFs sold across most sectors,” said a recent Morgan Stanley report. According to the report, domestic MFs net sold $1.1 billion worth of Indian equities during the July-September period, against a net inflow (net buy) of $50 million in the previous quarter. A broader look at the Capitaline data indicated that the decline in MF shareholding eased a little, with 107 or 53.5% companies within the BSE 200 universe seeing drop in mutual fund shareholding.

Some of the sectors that witnessed huge selling pressure by domestic MFs were FMCG, financials, capital goods, power generation & distribution, mining and metals, telecom — services, IT — software and automobiles, among others.

On the other hand, domestic fund houses increased their shareholding

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