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FII holding in Nifty 500 stocks sinks to 6-quarter low amid sell-off

The decline came amid concerns over rich valuations of Indian equities relative to other global markets

Mumbai / January 27, 2022 / 02:02 PM IST

Shareholdings of foreign investors in Nifty 500 index companies nosedived to a six-quarter low in the three months ended December after they withdrew almost $5 billion from the Indian equity market, Motilal Oswal Financial Services said in a report.

The holdings of foreign portfolio investors in Nifty 500 companies fell to 20.9 percent from 21.5 percent in the September quarter, an analysis of shareholding data showed.

FPI holdings in Nifty 500 companies declined for the fourth consecutive quarter amid concerns over rich valuations of India equities relative to other global markets. This led them to trim their holdings for better opportunities elsewhere.

The decline was also in contrast to market expectations that a selloff in Chinese technology stocks due to government intervention would nudge foreign investors to shift their funds to Indian equities.

Most of the selling by foreign investors was in the financial services sector, with their holdings falling to a 20-quarter low of 35 percent in the December quarter from a high of 45.2 percent in the same quarter two years ago.

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Foreign investors, however, remained overweight on financial services companies by a large margin as compared to the sector’s weight in the Nifty 500 index, Motilal Oswal Financial Services said.

Other than financial services companies, foreign investors also reduced their stake in telecom, information technology, retail, cement, automobiles, metals, and energy companies.

Where FPIs were sellers, domestic institutional investors were buyers. Net purchases by DIIs were more than $8 billion in the December quarter, taking their overall holding in Nifty 500 companies to 14 percent.

DIIs increased their stake in 53 percent of the Nifty 500 stocks and in 70 percent of the Nifty 50 companies. DIIs increased their holdings in information technology stocks by 120 basis points, in capital goods by 40 basis points, and in retail sector companies by 20 basis points, on a sequential basis.

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Chiranjivi Chakraborty
first published: Jan 27, 2022 01:39 pm
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