The three institutional classes — foreign portfolio investors (FPIs), domestic mutual funds(DMF) and domestic financial institutions (DFIs) — took their ownership of Indian stocks to either record highs or multi-year highs, in the June, 2017 quarter, Morgan Stanley said in a note to investors. During the quarter ended June 2017, their ownership rose to 40.7%, the highest level so far. Foreign portfolio investor ownership in Q217 rose to 27.5%, a rise of 59 bps quarter-on-quarter; FPI assets are valued at $395 billion. Domestic mutual funds increased their equity holdings for 12 consecutive quarters to 5.7% up 44 bps quarter-on-quarter. Domestic financial institutions – i.e., insurance and banks, bought equity stakes marginally during the quarter.
Their ownership rose to 7.6%, up 8bps q-o-q. The report further said that promoters diluted 140bps of their stakes, taking their ownership down to 45.6%, this is the lowest since March 2001. Consumer Staples and healthcare stocks were the most bought; while energy and materials were the most sold. FPIs, DMFs and domestic institutional investors (DIIs), bought staples, while FPIs sold materials, DMFs and DFIs sold energy.
The report added that the trend over the past year suggests that institutions have been adding to staples, healthcare and technology stocks while reducing in financials, energy, and materials. The overall institutional overweight in consumer staples is the highest since September 2013, and the underweight in materials is the highest since June 2010. The report further said that HDFC Bank and ICICI Bank saw most buying while Infosys saw most selling; amongst the top 20 stocks owned by FPIs.