FPIs cut stake in most Nifty firms in March quarter

By: |
April 22, 2020 3:30 AM

Interestingly, the banking and financial stocks saw ownership coming down the most as majority of foreign investors expect the impending economic slowdown due to the COVID-19 pandemic to have a greater impact on the sector.

With FPIs offloading both equities and debt, the rupee plunged to record lows and depreciated 5.6% against the dollar during the quarter.With FPIs offloading both equities and debt, the rupee plunged to record lows and depreciated 5.6% against the dollar during the quarter.

Foreign portfolio investors (FPIs), the second-largest owners of Indian equities after promoters’ groups, have pared stakes in several leading companies that are part of the Nifty50 during the March quarter.

Interestingly, the banking and financial stocks saw ownership coming down the most as majority of foreign investors expect the impending economic slowdown due to the COVID-19 pandemic to have a greater impact on the sector.

Of the 17 Nifty companies that have so far declared their shareholding data for Q4FY20, 16 saw overseas investors trimming their stakes in them, with Wipro being the only exception, data compiled from Capitaline show. While the overseas investors cut their stake in Axis Bank by 2.6% to 44.6% in March 2020, their holdings in HDFC and State Bank of India (SBI) came down by 1.9% and 1.4%, respectively. Foreign holdings in HDFC Bank — the largest lender by market capitalisation — has come off by 1% to 29.8% during the quarter.

The combined foreign holdings in these 16 stocks where FPIs reduced their stake during the quarter stood at 22.08% at the end of March 2020 against 23% in December 2019. That compares with the promoter holding of 28.5% as of March 2020.

Dalton Capital Advisors (India) director UR Bhat said “FPIs pulled out more from the financial sector as it is quite apparent that the economic fallout from the coronavirus pandemic will have a direct impact on the sector. Moreover, the extended lockdown has caused a significant slowdown in economic activity, that will reduce the repayment capacity of borrowers and thereby weakening the health of balance sheets”

The intensified selling in the financial space during the quarter had dragged the Nifty50 index down by 29.3%. In contrast, the Bank Nifty, which tracks both state-owned and private-sector lenders, had lost 40.5% during the same period. At about 37%, the financial services sector commands the highest weightage on the Nifty50 index.

Overseas investors had pulled out a record $6.6 billion from Indian equities in three months to March 2020. With FPIs offloading both equities and debt, the rupee plunged to record lows and depreciated 5.6% against the dollar during the quarter.

S&P Global Ratings, which slashed India growth forecast for FY21 to 1.8% from the earlier estimate of 3.5%, said: “We expect Indian banks’ asset quality to deteriorate, credit costs to rise, and profitability to decline. We have revised the economic risk trend for the banking system to negative from stable.”

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Rakesh Jhunjhunwala on selling spree; big bull cuts stake in Titan among other stocks
2Equity strategy for post-pandemic world: Morgan Stanley lists key themes to watch out for in 2021
3IRFC manages to raise Rs 1,389 crore from 31 anchor investors ahead of IPO