Money invested by domestic institutional investors (DIIs) and mutual fund houses reached an all-time high of 13.78% and 7.35%, respectively, in the quarter ended June, according to data shared by NSE Infobase, developed and powered by the Prime Database Group.
“Increase in DII ownership is a positive sign as it helps in reducing the dependence on FPI flows. This has been mainly driven by mutual funds while demonetisation was a turning point,” shared Pranav Haldea, MD at Prime Database Group.
The DII holding stood at 13.69% by value in the previous quarter. “If the government goes for divestment, promoter shareholding will increase. Every time the government is selling either through CPSE, a good part of it goes to institutions and a lot of companies will participate in QIPs, among other options. These activities rose institutional shareholding and reduces promoter holding,” said a fund manager.
“The institutional holding has gone up both in domestic and foreign investment, it commensurates [?] a decrease that has happened in both promoter and retail holding. There is a continuous flow through SIP and also from provident funds,” said Navneet Munot, chief investment officer at SBI MF.
Highest MF and DII holding is observed majorly in mid- and small-cap companies. DIIs have invested up to 68.9%, while MFs have poured up to 37.4% in companies. “From a mutual fund perspective, India is an underpenetrated market. It is a very low figure, whereas, in the US, the holding is in excess of 30-35% and so there is a long way to go from now,” said Kaustubh Belapurkar, director, Fund Research at Morningstar Investment Advisors.
In absolute value terms, too, MF and DII holding hit all-time highs as on June 30 — MF holding reached Rs 10.89 lakh crore, while DII holding hit Rs 20.42 lakh crore. Overall, in the past one quarter, DII holding went up in 577 firms listed on the NSE. The average stock price of these companies in the same period decreased by 7.32%.
On the other hand, DII holding went down in 506 companies listed on NSE. The average stock price of these firms in the same period fell by a much higher 11.23%. Retail holding in firms listed on NSE fell marginally to 8.37% by value as on June 2019, compared with 8.52% as on March 2019.
“I believe retail individual holding is a main concern as it has come down. Going ahead, MF and DII holding will continue to rise,” said Motilal Oswal Asset Management Company MD and CEO Aashish Somaiyaa.
