Moneycontrol
Last Updated : Feb 09, 2011 05:39 PM IST | Source: CNBC-TV18

Number crunching time

Statistics are like mini skirts. What they reveal is interesting but what they conceal is vital. A funny one liner but so true when we talk about market statistics.

Statistics are like mini skirts. What they reveal is interesting but what they conceal is vital. A funny one liner but so true when we talk about market statistics. I have done some number crunching. Presented this on CNBC-TV18 today and as promised, here is the blog entry.

First up, the Nifty is down 822 points or 13.3% since December 31. Now why is that date important? That's because the FII (foreign institutional investors) data is released at the end of every quarter and we have absolute numbers to talk about.

During this period, FIIs have net sold Rs 10,131 crore in Indian equity markets, which is USD 2.25 billion and change. Now, the question that has pained a lot of people is that are the Indian markets so shallow that USD 2.25 billion pullout leads to 15% correction? What would happen if the FIIs withdraw another USD 2.25 billion? Would we fall another 15-20%?

Well, the answer lies in some internals. Let's put this 822 point fall in perspective. Nifty 50 as the name suggests is a basket of 50 stocks and 8 of these 52 stocks have led to 56% contribution to the decline. In fact 71% of decline can be attributed to 15 stocks. Presenting the list below:

Nifty since December 31

Stock

Contribution

L&T

-94

RIL

-83

HDFC

-69

ICICI Bank

-56

ITC

-48

Infosys

-46

HDFC Bank

-32

ONGC

-32

 

 

 

 

 

 

 

Now comes the second internal. In one of my previous posts, I had pointed out at the importance of GROSS numbers from FIIs and not just the net number. And here are those numbers - gross buy worth Rs 74,343 crore and gross sell worth Rs 84,475 crore. Now this gross sell number is in excess of USD 19 billion. So clearly the selling has been intensive in individual stocks. Its getting masked by gross buying, which could be in non-index stocks or may be under-owned Index stocks.

And the final piece in puzzle now - take a look at the FII holding and the value of that holding in the top 11 Nifty stocks. Any guess how much it's worth? It's Rs 3.65 lakh crore or USd 81 billion. Staggering isn't it? Presenting the data below.

Stocks with high FII holding

Stock FII

Holding (Rs cr)

Infosys

64,908

RIL

53,573

HDFC

51,222

ICICI Bank

44,278

TCS

28,331

HDFC Bank

27,811

SBI

22,596

Bharti

21,939

Axis Bank

18416

ITC

17042

L&T

15566

 

 

 

 

 

 

 

 

 

 

As you would see, there is an overlap of many stocks in both these lists. My sense is that while there has been FII selling in some of the large cap stocks, the buying has happened in stocks which don't matter, or at least can't push up the Nifty. For example, an HCL Tech which has just 0.6% weight in Nifty but a stock which has actually risen in this carnage. Or even Power Grid for that matter.

Conclusion: I really wish we had the FII data on a monthly/fortnightly basis. That would surely solve this puzzle thoroughly. Now we have to wait for March end numbers and this quarter is not half way through yet.

By Anuj Singhal, Head-Markets Research at CNBC-TV18 (http://www.themarketinternals.com)

Coming up in some time:  A similar analysis on some of the midcap stocks which have seen big fall and their FII holdings.

First Published on Feb 9, 2011 05:26 pm
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