The latest shareholding pattern of the oil majors clearly shows that mutual funds have reduced their holdings in almost all the oil companies in the first quarter of the current fiscal (FY06).
Fund managers say the confusion over subsidies has been the prime reason for this shift in the shareholding pattern. Nilesh Shah, chief investment officer, Prudential ICICI Asset Management Co Ltd, said, fund houses are not too sure about the subsidies issue and it seems that most of them have taken a cautious approach. However, he added that if one sees regular fuel price revision then there are chances that mutual funds may again start investing in the oil companies.
The highest fall was witnessed in Chennai Petroleum where MF holding fell to 1.45% as on June 30, 2005, a fall of nearly 62% from 3.81% as on March 31, 2005. BPCL and Bongaigaon Refinery also reported a fall of over 25% in the last three months. HPCL, IOC, Kochi Refineries Ltd and IBP also reported a fall in the MF holding in the range of 6-18% in the first quarter of FY06.
However, ONGC (up at 0.85% from 0.76%) and Mangalore Refinery (up at 0.13% from 0.03%) both witnessed a rise in the MF holding.
Interestingly, FIIs still seem to be bullish with most of the oil majors reporting a rise in the foreign holding. Market participants say that new funds which have come to India look to invest in frontlines.
Andrew Holland, executive vice president, DSP Merrill Lynch, said, Japanese or European funds that have come to India recently look at investing in index stocks or dividend paying stocks. FIIs are of the view that the worst phase of the oil companies is over and a fuel price revision will bring them back in action. Most of the oil majors are fundamentally strong.
While Kochi Refineries Ltd saw the foreign holding rise from 4.65% as on March 31 to 5.17% on June 30, BPCL witnessed a surge of nearly 6% from 14.73% to 15.55% in the first quarter of FY06.
ONGC, IBP, Mangalore Refineries and Chennai Petroleum all witnessed a rise in their foreign holding in the period between March 31 and June 30, 2005.