‘Rebalance’ in Indian markets: Domestic investors buy as FPIs sell

FPIs continued to pull out funds from Indian equities in the quarter ended June 2022 amid concerns over rising inflation, interest rates and global growth, their stake in NSE-listed companies falling to a 10-year low of 19.2 per cent.

In the same period, however, domestic institutional investors (DIIs), who continued to invest in Indian markets, pushed their stake in Indian equities to an all-time high of 14.06 per cent.

According to data collated by primeinfobase.com, domestic retail holdings (individuals up to Rs 2 lakh) also remained strong in April-June, while the Sensex saw a fall of nearly 15 per cent in the quarter since its March 31, 2022 close. Retail holding in entities listed on the National Stock Exchange (NSE) stood at 7.4 per cent at the end of June, marginally lower than the highest share of 7.42 per cent seen in the quarter ended March.

“This further reflects the rise of domestic investors and the large counterbalancing role they have played for foreign investors. To put this also in perspective, as on March 31, 2015, the share of FPIs stood at 23.30 per cent, while the combined share of DIIs, Retail and HNIs was just 18.47 per cent. The combined share of DII, Retail and HNI is now at an all-time high of 23.53 per cent,” said Pranav Haldia, Managing Director, Prime Database Group.

During the quarter, while the net outflow from FPIs stood at Rs 1,07,340 crore, the net inflow from DIIs stood at Rs 1,28,277 crore. The data shows that the gap between FPI and DII holding has come down to its lowest level in this quarter as DII holding is now just 26.77 per cent less than FPI holding. (DII holding was 31.99 per cent lower than FPI holding as on March 31, 2022).

See also  Why drug stores stash their products behind plastic cases

The FPI to DII ownership ratio also fell to a new low of 1.37 on June 30, from 1.47 on March 31. Over a period of 13 years (starting June 2009), the share of FPIs has increased from 16.02 per cent to 19.2 per cent. Percentage, the share of DII has increased from 11.38 per cent to 14.06 per cent.

The share of domestic mutual funds in NSE listed companies rose in the fourth quarter and reached a 2-year high of 7.95 per cent on June 30, 2022, from 7.75 per cent as on March 31, 2022. This was after five consecutive quarters from March 31, 2020 (7.96 per cent) to June 30, 2021 (7.25 per cent). The stock rose on net inflows of Rs 73,857 crore from domestic mutual funds in the June quarter.

LIC’s stake (in 286 companies where it holds more than 1 per cent) increased to 3.92 per cent as on June 30, 2022, from 3.83 per cent as on March 31, 2022. The share of high net worth individuals (HNIs) (with individuals holding more than Rs 2 lakh in a company) in NSE-listed companies also declined from 2.21 per cent on March 31 to 2.08 per cent as on June 30.

News bulletin , Click to get the best interpreters of the day delivered to your inbox

Haldia said the FPI’s stake can be disclosed only in more than one per cent of the company.

The government’s (as promoter) stake in listed companies on the NSE saw a huge increase from 5.48 per cent on March 31 to 7.15 per cent by June 30. According to Haldia, this was mainly due to the mega IPO of LIC.

See also  Ukrainian business owner continues to help Ukraine during war

Private promoters’ stake in NSE listed companies declined to 44.33 per cent as on June 30, from 45.12 per cent as on March 31.