Foreign institutional investors (FIIs) have upped their stake in a dozen Sensex companies in the past quarter. Of the 19 Sensex firms that have disclosed their shareholding pattern for the quarter ended December 31, 12 saw a rise in the FII holdings. However, FIIs reduced their stake in five firms in the said period.
Auto firms Mahindra & Mahindra (M&M) and Hero Honda saw the maximum rise in their FII stake over the previous quarter, by 2.2% and 1.7%, respectively. FIIs reduced their holdings the most in Bajaj Auto and Bhel, by 1.7% each. According to Bloomberg data, FIIs invested a net $10.1 billion worth of equities into the market.
Among BSE 500 scrips, FIIs have significantly upped their holdings in Power Grid Corporation (10.4%), Zee Entertainment (5.2%), Kirloskar Industries (4.3%), Voltas (3.3%), IndusInd Bank and Lupin (3.1%), and GE Shipping and Srei Infrastructure Finance (3%). They reduced their stake by more than 2% in Kalpataru Power, Sesa Goa and Apollo Tyres, among others.
Sectors such as healthcare and auto saw robust FII inflows. Interestingly, while FIIs increased their exposure in a number of banks such as IndusInd Bank, City Union Bank, Canara Bank, Dhanlaxmi Bank and Karnataka Bank, they reduced their holdings in others such as Union Bank of India, J&K Bank, State Bank of Bikaner and Kotak Mahindra Bank.
FIIs invested a record $29.32 billion in the calendar year 2010, largely attracted by India?s 8%-plus growth rate.
However, several factors could cause foreign inflows to dry up in the march quarter. Major worries include inflation, rising interest rates and high current account and fiscal deficits. What?s more, at a PE multiple of 17.5, the Indian market looks a tad expensive.
According to Ullal Ravindra Bhat, managing director of the Indian arm of Dalton Strategic Partnership, a global fund registered as an FII in India, India?s high fiscal deficit could prove to be a major deterrent to foreign inflows: ?While the 3G auctions helped to rein in the fiscal deficit last year, what will the government do this year??
Another concern is the scams that have come to light in recent times. ?There hasn?t been any substantive action from the government. Corporate India and the investment community are looking to the government for direction,? said Andrew Holland, CEO, equities, at Ambit Capital.