FIIs prefer large blue chips over small and mid-cap

FIIs prefer large blue chips over small and mid-cap
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First Published: Wed, Mar 28 2007. 02 45 PM IST
Updated: Wed, Mar 28 2007. 02 45 PM IST
By PTI
New Delhi: Indian stock market may be emerging as one of the most attractive destination for overseas investments, but when it comes to Foreign Institutional Investors (FIIs), large blue chips score over their smaller counterparts by a huge margin.
Out of the total FII inflow into the country last year, the top 100 companies accounted for 80.34% of their investment, while their exposure in top 150 companies was even more than 88%, economic think-tank, National Council of Applied Economic Research says.
However, the exposure of FIIs, who control over 11.5% of the country’s total market capitalisation, in the blue chip stocks has seen a modest decline over the past four years, NCAER said in its latest monthly report.
The highly skewed distribution of FII flows implies that not all enterprises have been able to attract inflows, it said, adding, investments are going mostly into companies with strong fundamentals.
This indicates that FIIs have a strong influence on the stock markets and influence decisions of the domestic investors as well.
More than 60% of the above 150 companies are among the BSE 100 index, it said.
Investments in strong companies means that the threat of capital flight and volatility of flows is smaller than what would have been the case if the investments were in weaker opportunities, it said.
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First Published: Wed, Mar 28 2007. 02 45 PM IST
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