As Indian investors surpass FIIs in ownership, which stocks are they betting on?
1 min read 04 Aug 2022, 01:58 PM ISTA small trend reversal in July with FPIs turning net buyers and domestic inflows have slowed, said Jefferies
PremiumDomestic holding (Domestic mutual funds, Insurance & Retail) is now 4ppt higher than Foreign Portfolio Investors (FPI) - the largest gap ever. A small trend reversal in July with FPIs turning net buyers and domestic inflows have slowed, highlighted global brokerage Jefferies in a note on trends in investor positioning for the June 2022 quarter.
FPIs had been selling equities in the Indian markets for the past nine-to-ten months barring the latest buying due to various reasons, including tightening of monetary policy in advanced economies, and rising dollar and bond yields in the US.
However, after nine months of outflows, foreign institutional investors (FIIs) turned net buyers of Indian stocks in the last two months of July and August.
Energy sector stocks continue to remain the largest overweight (OWT) for domestic investors, whereas underweight (UWT) on Staples and Utilities increase meaningfully from the previous quarter. Meanwhile, financial stocks continue to remain largest OWT for DMFs at 5ppt. OWT in Consumer Disc. also increased by 27bps quarter-on-quarter (QoQ).
“DMFs increased their UWT in staples by 0.5ppt QoQ to 2.5ppt, a 4-quarter high. The relative weights in the large Financials and IT stocks were +/-0.1 ppt respectively from the previous quarter, with the OWT on financials now at a considerable 5.0 ppt. The UWT on materials was cut by 0.3 ppt while the UWT on utilities increased by another 0.4 ppt," Jefferies' note stated.
June 2022 quarter see most of its retail inflow through the MF route while direct inflow remained muted. The total retail (MFs + direct) ownership in overall market increased by 0.2ppt sequentially to 17.8%. As markets turned volatile, the direct participation in market dipped as visible in non-institutional volumes share dropping to average levels. Strong inflows from retailer investors through the mutual funds route continued with $9.6 bn inflows net bought.
