Foreign portfolio investors (FPIs) have turned net sellers in September after six months of continuous buying, but their holdings increased in majority of the NSE-listed companies.
Out of 379 companies in the Nifty 500 universe for which data is available, FPIs raised their stake in close to 63% of them, or 237 companies. At the same time domestic investors or DIIs raised their holding in 224 companies or 59% of the companies.
The sell-off by foreign investors in September seemed to shake up market sentiment, but experts say that even though many sought to take home some money after the stellar showing in small- and mid-cap companies, the bulk still see value in Indian equities.
“FPIs are now going down the market cap ladder, and buying into mid-cap companies instead of the big names. These have considerable liquidity. At the same time, promoters are eager to get marquee names on board because it only help to strengthen credibility in their brand,” said U R Bhat, co-founder and director at Alphaniti Fintech.
Besides financials, which has been the mainstay for FPIs, sectors that saw the most activity were pharma/healthcare, and IT (software).
FPIs have a large appetite, and their movement towards the smaller names is good for the overall market because it ensures that liquidity will not be restricted to only the large names, added Bhat.
GMM Pfaudler, Patanjali Foods, and Medplus Health saw an increase of more than 7% in FPI holding during the September quarter, while Paytm and Amara Raja saw a slide of more than 10%.
A look at the June quarter data also shows that the healthcare/pharma sector had seen the maximum buying and selling of shares by FPIs after financials.
FPIs and DIIs had raised their holding in 55% and 53% of the companies in that quarter (out of 381 firms for which data is available). Similarly, promoter stake increased in just 4% of the companies, while 24% of the companies saw promoters offloading shares.
“Thanks to the surge in mid-cap and small-cap indices, both FPIs and DIIs saw value in these stocks. This gave them an opportunity for reallocation as the larger names disappointed, leading to institutional investors looking for diversification. In addition, the Adani issue has also prompted a re-think, which is why both FPIs and DIIs are looking for names with stronger fundamentals and growth prospects, ” said a fund manager who did not wish to be named.
In the Nifty50 bucket, FPI holding increased in half the 30 entities for which data is available. For DIIs, the holding increased in over two-thirds of companies.
