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Despite massive selling by Foreign Institutional Investor (FIIs), its share remained unchanged in the third quarter (Q3) of the fiscal, according to a research report by Axis Capital.
The FII stake in the BSE500 index remained unchanged at 18 per cent, with FIIs showing a preference for non-Nifty stocks, as per the report. The report added, the FII share of BSE500 remain unchanged (QoQ) in the December quarter, despite net selling of USD 11 bn. FII holdings increased 30 bp in non-Nifty stocks to 14.3 per cent, highest in six years but fell 30 bp (QoQ) to 22.9 per cent for Nifty stocks. In Q3, FII selling was concentrated in energy, financials, auto, and consumer sector however they bought IT services shares. FIIs remain Overweight on staples, NBFC and Underweight on IT, energy and auto. In the first 15 days of Jan'25, net selling by FIIs stands at USD 7 bn, selling was concentrated mainly in the financials sector. The report says FII selling is likely to continue till global uncertainty remains high. The report added that in contrast, the private promoter share of the BSE500 saw a sharp decline, falling to a seven-year low of 39 per cent at the end of the year. This was attributed to a combination of equity issuance and underperformance in promoter-heavy companies, such as those in the Reliance and Adani groups, as well as other key firms like HUL, Asian Paints, and DMart. The report highlighted that the government's share in BSE500 also saw a slight drop, falling 20 basis points quarter-over-quarter to 10.7 per cent. However, It added that the government's holdings saw a year-on-year increase, with their stake rising by 30 basis points and the value of their holdings reaching Rs 41 trillion, up from Rs 34 trillion in December 2023. On the domestic institutional investor (DII) front, their share of the BSE500 reached a record high of 16.3 per cent by the end of December 2024, with MF inflows and a rebound in direct retail investments playing a crucial role in the rise. The DII share was particularly bolstered by continued strong monthly SIP flows, which peaked at Rs 265 billion (USD 37 billion) in December. As a result, the retail ownership of BSE500 stocks also saw a slight increase witnessing a rise of 10 basis points quarter-over-quarter. FII outflows are expected to continue with January 2025 seeing a further USD 7 billion in net sales, predominantly in financial stocks. The report highlighted that despite a turbulent third quarter in the markets, the BSE500 mutual fund (MF) share continued its upward trajectory, reaching 11 per cent by the end of December 2024. This growth was mainly driven by steady increase in Systematic Investment Plan (SIP) flow. SIP flows witnessed an annualised addition of USD 37 billion in December, up from USD 31 billion in the previous rolling 12-month period. (ANI)
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