Mumbai: A handful of stocks on the Indian bourses have steadily changed hands from foreign institutional investors (FII) to the Indian public (non-institutional) during the past four quarters.
According to analysts, the move indicates lack of buying interest in these counters from institutional investors and that is prompting FIIs to offload stake in the open market.
The list includes mid-sized companies, such as Arvind Mills Ltd, Himachal Futuristic Communications Ltd (HFCL), Hotel Leela Venture Ltd, Inox Leisure Ltd, and smaller companies, such as Dwarikesh Sugar Industries Ltd, Manugraph India Ltd and SB&T International Ltd.
Most of these companies fall under sectors, which are staring at a down cycle or have a weak outlook, except for Hotel Leela and Inox.
The FII stockholding in Arvind Mills has decreased 62% in the past four quarters, while that in HFCL has gone down 73.6%. Dwarikesh Sugar saw an almost 56% slide in FII ownership. On Hotel Leela Venture, a hospitality firm, and Inox, a multiplex chain, FIIs cut exposure by 40%.
Manugraph India Ltd, the manufacturer of print machinery, also saw 71% of FII investments being sold out during the past four quarters.
“Some of them are purely a sector play,” said Manish Sonthalia, vice-president equity, at Motilal Oswal Securities Ltd, a listed retail brokerage firm. “Arvind Mills is the largest denim player and also a major exporter to the US. The firm’s growth is being hurt both by the strengthening rupee, as well as the slowdown in the US economy. The sugar industry is at a stage where their product is priced lower than its manufacturing cost.”
Hotel Leela is capitalized at Rs2,153 crore on the Bombay Stock Exchange (BSE).
However, Hotel Leela and Inox are both part of fast growing sectors. “Hotel Leela is one of the most highly priced stock in the hospitality sector,” Sonthalia said. “FIIs could be booking profits on their investments. On the other hand, Inox had been quoting fancy valuations ever since it started trading. But it has not achieved the desired growth.”
FIIs, who have exited these stocks through open-market sale, include big names such as Merrill Lynch Capital Market Espana, Goldman Sachs Investments, Citigroup Global Markets India Pvt. Ltd, HSBC Global Investment Funds, CLSA, T. Rowe Price International, and Swiss Finance Corp. Ltd.
The prices of these stocks witnessed a meltdown during the past four quarters even as Sensex, the benchmark index of BSE, gained 40%. Dwarikesh and Manugraph have lost close to 50% each. Hotel Leela is down 25% and Inox is down 20%. Arvind Mills has lost 10%, during this period.
The non-institutional shareholding in all these companies has moved up significantly, though. Arvind Mills saw a 60% rise in public holding and Dwarikesh Sugar clocked a 56% rise. Hotel Leela also saw about 35% rise in public holding. On Friday, Hotel Leela stock zoomed more than 12% to close at Rs65.20. Arvind Mills stock price closed at Rs74.80—up 2%, while Dwarikesh Sugar and HFCL added 2.6% and 1.3%. Inox and Manugraph ended with loses.