While markets have rallied to their record highs, foreign institutional investors (FIIs) have largely shied away from the corporate houses such as Tatas and Ambanis.
Of the 30 Tata companies listed on the bourses, FIIs have raised stake in only 4 and reduced stake in 17 during the three-month ended December. Among the Mukesh Ambani group companies, FIIs have not raised stake in none. Similarly, among the Anil Dhirubhai Ambani Group (ADAG) companies, FIIs have not raised their stake in even one company, data from Capitaline shows.
Experts believe institutional investors are looking beyond the large-cap names due to their expensive valuations and a lack of strong earnings growth. “Both FIIs and domestic institutional investors’ monies are chasing value and growth. They are largely focusing on mid caps and rate sensitives, which is why incremental buying in some of these large-cap names is slowing down,” Vinay Khattar, head of research for retail capital markets at Edelweiss. Among the BSE-listed companies, FIIs have raised stake in 59 mid caps as against 48 large caps.
Even Tata Goup’s flagship TCS has seen FIIs trimming their exposure from 16.84% in Q2 to 15.96% in Q3. Other Tata Group companies have also failed to attract FII interest in Q3. Tata Sponge Iron has seen the sharpest cut in FII holding at 6.23 ppt. Tata Global (-4.34 ppt), Tata Steel (-2.61 ppt), Tata Chemical (-2.06 ppt), Tata Motors (-1.33 ppt) and Tata Power (-0.63 ppt) have all seen a drop in FII holding.
Among the ADAG companies, FIIs’ stake has fallen the most in Reliance Capital — from 19.54% in Q2 to 17.35% in Q3. Reliance Power and Reliance Infrastructure have seen the FII stake reduce by 0.8 percentage points (ppt) and 0.5 ppt in Q3, respectively. Among Mukesh Ambani’s group, RIL, Reliance Industrial Infrastructure, Network 18 and TV18 Broadcast have seen 0.7-2.16 ppt decline in FII stake.
FIIs seem to have been the most wary of the OP Jindal Group with Jindal Steel’s officials being part of a CBI inquiry into the Coalgate scam in the December quarter, as per certain reports. Jindal Saw (-6.65 ppt), Jindal Stainless (-6.32 ppt), Jindal Steel (-1.45 ppt) and Nalwa Sons Investments (-4.21 ppt) have all seen a drop in the FII stake in the December quarter.