As billions flow around in search of higher returns, portfolios see much shifting around.
The recent market rally, marked by strong foreign flows, has seen Foreign Institutional Investors (FIIs) churn and increase their holdings across companies. On a net basis, FIIs have invested about Rs 58,000 crore during the quarter ended September, compared to Rs 10,400 crore in the preceding June quarter.
Interestingly, during the September quarter, domestic mutual funds (MFs) have been net sellers to the tune of Rs 14,800 crore – pointing to a high portfolio churning in the recent past.
| WHAT’S IN, WHAT’S OUT | ||
| FII ACTIVITY | ||
| Company | Stake (%) | % chg |
| BF Utilities | 2.23 | -76.30 |
| Tanla Solutions | 4.87 | -71.30 |
| ABB | 3.02 | -70.00 |
| Bajaj Fin. | 6.29 | -62.10 |
| Binani Cement | 1.11 | -59.60 |
| Engineers India | 3.66 | 369.20 |
| Uflex | 4.61 | 326.90 |
| Thomas Cook (I) | 0.55 | 266.70 |
| Orchid Chemicals | 14.27 | 186.00 |
| Alok Inds. | 13.89 | 182.30 |
| DOMESTIC MUTUAL FUNDS ACTIVITY | ||
| Company | Stake (%) | % chg |
| Alok Inds. | 0.12 | -98.70 |
| Titagarh Wagons | 0.15 | -88.60 |
| A B B | 0.40 | -85.80 |
| Tata Elxsi | 0.36 | -84.10 |
| Noida Tollbridg. | 0.70 | -73.60 |
| Godrej Inds. | 1.04 | 2500.00 |
| Fortis Health. | 1.77 | 1509.10 |
| Anant Raj Inds. | 2.77 | 313.40 |
| Raymond | 8.78 | 281.70 |
| JSW Steel | 0.67 | 252.60 |
| Companies wherein institutional stake was below 0.5% in both the quarters have been excluded % change is over the June 2010 quarter, Source: Capitaline Plus | ||
Based on the changes in shareholding patterns of the BSE 500 (data available for 374 companies) in the September quarter, compared to the June one, we looked at some of these trends to understand where the institutional money is being deployed and where it is being pulled out.
Favourite stocks
There are many names where FIIs and MFs have increased their exposure. In the case of travel service provider Thomas Cook, domestic and international institutions have more than doubled their holdings. After listing of its peer, Cox & Kings, the scrip has made gains, mainly on the back of revival in the hospitality industry and investors preferring domestic consumption.
Among others, Godrej Industries has also seen significant increase in its holdings. Apart from the fact that investors bought FMCG (fast moving consumer goods) stocks, Godrej Industries was in the news for its acquisition and joint development of properties with Godrej Properties.
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In addition, one of the largest producers of graphite electrodes in the world, Graphite India, has seen FIIs and MFs increasing their stake by 51 per cent and 113 per cent, respectively. The company is said to be benefiting on account of revival in steel demand, as well as the ongoing expansion of the company. At Rs 94, the stock is trading at eight times its trailing earnings.
Investors can also keep an eye out for Redington India, where FIIs and MFs have increased stake in the range of 55-70 per cent. The company is in the business of supply and distribution of information technology products and operates in some fast-growing markets such as India, West Asia and Africa. The stock was in the news last month, for its acquisitions in Turkey, again a high growth market. Brokers have a buy rating on this stock, which is trading at 11 times its estimated earnings for 2010-11.
Among others, companies like Entertainment Network, Great Offshore, Petronet LNG and Idea Cellular have seen a significant increase in FIIs and MF holdings.
Not in buy list
Domestic and foreign institutions have also been selling or reducing their stakes in several companies. ABB is a prominent one, where due to attractive open offer prices, many investors have sold their shares. In the case of Aban Offshore, the reasons for turning bearish are high debt in the books and uncertainty over the outlook of offshore activities.
In financial services, Bank of Maharashtra and IDBI Bank have seen significant drop in FII and MF stakes. Bank of Maharashtra was in the news for higher provisioning of its gross non-performing assets and required infusion of capital from the government. The bank reported 16.35 per cent growth in net profit in the June quarter, at Rs 118 crore. It could have been higher, as the provisions and write-off jumped by 166 per cent to Rs 96.7 crore.
The reason for FIIs pulling money out of Tanla Solutions, the telecom value-added services player, could be due to its poor financial performance in the past two quarters. During the first quarter of financial year 2011, it reported 79 per cent decline in net profit, followed by 70 per cent in the second quarter.
The institutions also reduced their holdings in the broking and financial services provider, Religare Enterprises. The company incurred Rs 49.2 crore of losses in the quarter ended June, followed by Rs 23.9 crore net loss in the September quarter.