High FII holding in equity raises risk of Nifty freefall

The Nifty fell over 230 points and closed at 5507, a tad higher than the psychological 5500 mark. Financial stocks were under pressure due to high foreign institutional investor (FIIs) holdings in those, reports CNBC-TV18’s Varinder Bansal. Technology, pharma, and consumer durables pack have most of the FII holdings after the financial stocks. Such high holdings make the market vulnerable in case of an FII redemption. 

Also read: Rupee at 62 against dollar: Why RBI measures aren't working  FIIs held around 73.5 percent in Housing Development Finance Corporation (HDFC), 52.2 percent in Infrastructure Development Finance Company (IDFC), 42.3 percent in IndusInd Bank. Axis Bank, HDFC Bank, Kotak Mahindra have holdings between 35 percent and above. Infosys led the IT stocks space which commanded FII ownership of nearly 40 percent. Following the suite is HCL Technologies, which has a FII investment of 24.5 percent. Dr Reddys leads the pharma pack with a 33 percent holding by FIIs, while Ranbaxy Labs has the lowest share of 10.7 percent. Bharat Heavy Electricals (BHEL) has an ownership of only 15 percent but has witnessed carnage, while Tata Steel and Coal India have ownerships of 13 percent and 5.5 percent respectively. However, Hero MotoCorp is an exception as it has not fallen much. The FII holding in this stock it is nearly 30 percent. Meanwhile, banks such as Bank of Baroda (with FII holding of 15.5 percent) and State Bank of India (with FII holdings of 10 percent) have also seen a sharp fall.