Foreign portfolio investors or FPIs have been selling Indian shares aggressively with the current month already registering net sales in excess of $3.7 billion. This is on the back of more than $5 billion of net selling in the last quarter of the previous calendar year.
The three-month period between October and December 2021 also saw FPIs reducing their stake in a majority of Nifty and Nifty 500 companies, as per a latest report by Motilal Oswal Financial Services.
In the Nifty 50 universe, which comprises 50 of the largest listed companies in terms of market capitalisation, foreign investors reduced their stake in nearly three-fourths of the segment or 74 per cent of the total number of companies in the index.
Axis Bank, Indusind Bank, Hero Motocorp, ICICI Bank, Grasim Industries, HCL Technologies, Divi's Labs, Tata Steel, Bajaj Auto, and JSW Steel were the top stocks that saw a decline of more than 1 per cent in the FPI holding when compared to the previous quarter, stated the report.
In the broader Nifty 500 index, the quantum of FPI stake fell to a six-quarter low level of 20.9 per cent as on December 31, 2021. In the Nifty 500 index, 53 per cent of the companies saw the FPI stake going down in the December quarter.
Interestingly, domestic institutional investors or DIIs increased their stake in the exact same quantum of companies - 53 per cent - in the Nifty 500 universe. In the Nifty 50 benchmark as well, DIIs appear to have taken a contrarian bet in the December quarter by increasing their stake in 70 per cent of the companies.
Among sectors - in the Nifty 500 universe, FPIs have the highest ownership in private banks (46.1 per cent), followed by NBFCs (29.7 per cent), insurance (22.9 per cent), Oil & Gas (22.6 per cent), and technology (19.8 per cent), while DIIs have the highest ownership in private banks (23 per cent) followed by capital goods (20.5 per cent), PSU banks (17.9 per cent), consumer durables (16.9 per cent), and metals (16.7 per cent).
Incidentally, FPI holding in the BFSI - private banks, NBFCs, insurance, and PSU banks - fell for the fourth straight quarter to 35 per cent in the December quarter, which is also the lowest in 20 quarters.
Meanwhile, DII holdings in Nifty stocks increased the most in IOCL, Axis Bank, Hero Motocorp, ICICI Bank, Divi's Labs, HCL Technologies, Indusind Bank and Eicher Motors, as per the report.
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