Q1 report: FII ownership in Nifty500 companies remains near 5-year low

Foreign institutional investors' (FIIs') holdings in Nifty500 companies remained near 5-year low in Q1FY21, said a report by Motilal Oswal Financial Services.

The brokerage highlighted that FII holdings increased marginally in Q1 by 8 bps quarter-on-quarter (QoQ), but declined 130 bps year-on-year (YoY) to 20.8 percent.

DII holdings were also marginally up in the Nifty500 companies by 7 bps QoQ and 90 bps YoY to 14.7 percent.

The FII-DII ownership ratio in the Nifty500 was at 1.4 times in Q1FY21, unchanged from the previous quarter, and was down from 2.1 times in June 2015.

"Over the last year, an increase in the FII-DII ratio was recorded in the insurance sector. Telecom, NBFC, private banks, cement, automobiles, retail, healthcare and technology were the key sectors to see a decline," said Motilal Oswal.

The report further said that FIIs reduced ownership in 68 percent in Nifty 500 and 74 percent in Nifty50 companies QoQ, while DIIs increased stake in 50 percent in Nifty 500 and 68 percent in Nifty50 companies QoQ.

As per Motilal Oswal, in past year, an increase in the FII-DII ratio was recorded in the insurance sector.

Telecom, NBFC, private banks, cement, automobiles, retail, healthcare and technology were the main sectors to see a decline.

In the Nifty500, FIIs have the highest ownership in private banks (44 percent), followed by NBFCs (31.6 percent), oil & gas (22.4 percent), telecom (20.6 percent) and real estate (20.5 percent), said Motilal Oswal.

Kotak Mahindra Bank, HUL, HDFC Life Insurance, L&T and Asian Paints were the top stocks to witness an increase of more than 1 percent in FII holdings on QoQ basis.

JSW Steel, SBI, Power Grid, Hero Moto and Bharti Infratel were the top stocks to see a decline in FII holdings by more than 1.5 percent QoQ basis.

DIIs have the highest ownership in capital goods (22.1 percent), metals (21.5 percent), private banks (20.2 percent), utilities (18.8 percent) and autos (16.3 percent), said the brokerage.

As per Motilal Oswal, the top increase in DII holdings in Nifty stocks on QoQ basis was seen in Kotak Mahindra Bank, Bharti Airtel, Hero Moto, HUL, Power Grid and Mahindra & Mahindra which saw an increase of more than 1.5 percent.

L&T, Grasim Industries, Cipla and Zee saw declines in DII holding by more than 1 percent on a QoQ basis.

Insurance, consumer, oil & gas were among the sector that saw FIIs increase stake in them while PSU banks, telecom, technology were among the sectors in which FIIs reduced stake.

"Sequentially, FIIs have increased stake in insurance (up 170 bps), consumer (up 110 bps), Oil & Gas (up 110 bps), auto (up 60 bps), healthcare (up 40 bps) and retail (up 30 bps), capital goods (up 20 bps) and real estate (up 10 bps)," Motilal Oswal said.

"In contrast, FIIs reduced stake in PSU banks (down 220 bps), NBFCs (down 180 bps), telecom (down 110 bps), technology (down 40 bps), cement (down 40 bps), private banks (down 40 bps), metals (down 20 bps) and utilities (down 20 bps)," Motilal Oswal said.

DIIs, on the other hand, on a QoQ basis, increased stake in telecom (up 100 bps), auto (up 80 bps), insurance (up 60 bps), consumer (up 40 bps) and technology (up 30 bps). PSU Banks (down 260 bps), capital goods (down 80 bps) and utilities (down 70 bps) were the major sectors where DIIs reduced stake by more than 50 bps, Motilal Oswal said.