Foreign institutional investors (FIIs) have sequentially upped their stake in 121 out of 450 companies that have disclosed their shareholding pattern for the quarter ended September 2011. FIIs are more bearish when it comes to the 30 stocks belonging to the BSE Sensex index, having reduced their stake in 10 out of 14 Sensex companies, for which data is available. Banking, metals and mining companies have seen a significant paring of FII exposure.

Among Sensex firms, FIIs have increased their holding the most in ONGC and Hero Motorcorp, increasing their stake by R744 crore and R441 crore, respectively. FIIs have sold the most in State Bank of India and Tata Steel, decreasing their stake by R2,704 crore and R976 crore, respectively. In%age terms, they have offloaded the most in Hindalco Industries (2.59%).

Outside of the Sensex pack, Lupin (R544.99 crore) and Apollo Hospitals (R398.85 crore) have seen the maximum increase in their FII holding. Others firms, which have seen substantial investment include Dr Reddy’s Labs, Petronet LNG, GAIL (India), Kotak Mahindra Bank, Redington India and ACC.

In%age terms, FIIs have hiked their holdings the most in Redington India (7.6%), Zee News (6.9%), Apollo Hospitals (4.3%) and Gujarat Pipavav (3.2%). The maximumpercentageage decline was in Info-Drive Software (35%), Educomp Solutions (5.7%), PVR (4.6%), BEML (4.1%) and Dalmia Bharat (4%).

FIIs have significantly reduced their stake in banking companies.

These include Axis Bank (3.5%), State Bank of India (2.2%), Union Bank (2.3%), Karnataka Bank (1.9%), Bank of Baroda (1.7%), Canara Bank (1%).

FIIs have also pared their exposure to metal & mining firms. Prominent examples include JSW Steel (2.63%), Hindalco Industries (2.6%), Tata Steel (2.45%) and Jindal Steel (1.15%).

FIIs are among the main drivers of Indian equities and have sold shares worth $1.18 billion in the year to date. Apart from the turmoil facing the global economy, high interest rates and high inflation back home could impact FII inflows. According to Sashi Krishnan, CIO, Bajaj Allianz Life Insurance, FII inflows have been mixed and there is not enough overseas investment coming in to support our market at present.

According to a recent report by Kotak Securities, interest rates and inflation are likely to peak over the next 2-3 months. The likely decline in crude prices over the next 3 to 6 months could also act as a positive. However, an uncertain global environment and continued weak governance overshadow these positives.