According to India Strategy Report from Motilal Oswal Financial Services, in the Mar’21 quarter, FIIs posted inflows of USD7.3b, whereas DIIs recorded outflows of USD3.2b. Divergent sequential trends are seen between FII and DII purchases. FIIs increased weights in two-thirds of the sectors (Telecom, Metals, Consumer Durables, Real Estate, and Cement), while DIIs trimmed weights QoQ. FIIs increased ownership in 57%/64% of Nifty-500/Nifty-50 companies QoQ, while DIIs decreased stake in 56%/62% of Nifty-500/Nifty-50 companies QoQ. The FII-DII ownership ratio in the Nifty-500 remained at 1.6x in 4QFY21 (unchanged from the previous quarter), but was up from 1.4x in Mar’20.
In terms of absolute holdings, of the total FII holdings of USD593b, Private Banks is at the top with USD139b in investment value.
In its latest India Strategy report, Motilal Oswal Financial Services dives deep into the ownership of various sectors/companies in the Nifty-500 to see how this has changed in 4QFY21.
|FII ownership in Nifty-500 up 160bp YoY|
FII holdings in the Nifty-500 were back at pre-COVID levels in 4QFY21 – they declined a marginal 20bp QoQ, but increased 160bp YoY to 22.3%. DII holdings in the Nifty-500 were down 10bp QoQ / 50bp YoY to 14.2%.
Sector holdings: FIIs post highest QoQ change in Telecom, Metals, Consumer Durables; whereas, DIIs recorded only in Consumer, Healthcare, PSU Banks. In the Nifty-500, FIIs have the highest ownership in Private Banks (47.9%), followed by NBFCs (32.9%), O&G (23.1%), Insurance (22.2%), and Real Estate (21.5%). DIIs have the highest ownership in Capital Goods (21.9%), Private Banks (20.4%), Metals (18.3%), Consumer Durables (17.8%), and PSU Banks (17.6%). Sequentially, FIIs increased stake in Telecom (+130bp), Metals (+100bp), Consumer Durables (+100bp), Real Estate (+80bp), Cement (+60bp), Chemicals (+60bp), Insurance (+50bp), and Healthcare (+40bp). In contrast, FIIs reduced stake in NBFCs (-40bp), Auto (-30bp), Consumer (-20bp), and Technology (- 10bp).
On a QoQ basis, DIIs increased stake in Consumer (+30bp), Healthcare (+20bp), and PSU Banks (+20bp). Utilities (-120bp), Consumer Durables (-90bp), Capital Goods (-50bp), and Telecom (-50bp) were the major sectors where DIIs reduced stake by more than 50bp.
Financials has had a dominant run over the past few years. However, BFSI’s (Private Banks, NBFCs, Insurance, and PSU Banks) underperformance has continued to reflect in the FII allocation – down to 39.3% as of Mar’21, from 45.1% in Dec’19 and 40% in Mar’20, in the Nifty-500. This has resulted in the trimming of weight by 140bp QoQ / 70bp YoY. However, FIIs remain significantly overweight by 770bp in BFSI v/s the Nifty-500 (BFSI’s weight in the Nifty-500 currently stands at 31.6%). n BFSI is followed by Technology, up 10bp QoQ / 60bp YoY, with 12.7% weight. Technology is followed by O&G (10.7%) and Consumer (7.5%). Overall, the Top 5 sectoral holdings of FIIs in the Nifty-500 account for 75.5% of total allocations – BFSI (39.3%), Technology (12.7%), O&G (10.7%), Consumer (7.5%), and Auto (5.3%).
Using the Nifty-500 as the benchmark, DIIs are significantly overweight in Metals, PSU Banks, Capital Goods, Consumer, and Utilities and underweight in NBFCs, Private Banks, and Technology. Overall, the top-5 sectoral holdings of DIIs in the Nifty-500 account for 66% of the total allocations – BFSI (27.8%), Technology (11.5%), Consumer (10.7%), O&G (9.8%), and Auto (6.2%). In 4QFY21, DIIs increased weight in the following sectors on a QoQ basis: Metals (+60bp), PSU Banks (+60bp), Cement (+50bp), Infrastructure (+20bp), Capital Goods (+20bp), Technology (+20bp), Automobiles (+10bp), and Chemicals (+10bp). They reduced weight in Private Banks, Healthcare, Consumer, O&G, Telecom, NBFCs, Insurance, and Retail.
Out of total DII holdings of USD378b in the Nifty-500, Private Banks is at the top with USD59b, followed by Technology with USD43b and Consumer with USD40b.
|Nifty-50: FIIs raise holdings in 64% of stocks; DIIs decrease in 62% of stocks|
FIIs raised stake in 64% of Nifty-50 companies on a QoQ basis, while DIIs reduced stake in 62% of Nifty-50 companies. SBI Life Insurance, UPL, Hindalco, Tata Steel, Power Grid, Grasim, Hero MotoCorp, and Cipla were the top stocks to see an increase of more than 1% in FII holdings on a QoQ basis. IndusInd Bank, Tata Motors, and Bajaj Auto were the top stocks to see decline in FII holdings by more than 1% on a QoQ basis.
DII holdings in Nifty stocks increased the most in BPCL, Bajaj Auto, IndusInd Bank, and SBI Life Insurance – by more than 1% on a QoQ basis. Power Grid, Grasim, Bharti Airtel, Hero MotoCorp, Hindalco, ICICI Bank, and Tata Consumer posted declines in DII holdings by more than 1% on a QoQ basis.