FIIs keep the faith in mid and small-caps

Shore up Stake across companies by 130% over the last two years

The shareholding pattern of a sample of small and mid-cap companies shows that foreign institutional investors (FIIs) have increased their holding in mid-cap and small-cap stocks by a huge 130 per cent in the last two years.

The FIIs' holdings in the CNX Midcap-200 stocks has increased from 1.57 per cent of the total equity capital of the 200 companies in March 2003 to 2.84 per cent in March 2004 and further to 3.61 per cent in December 2004.

Excluding the 200 stocks that make up the Mid-cap index, FIIs' holding in other mid-cap stocks increased from two per cent in March 2003 to 4.50 per cent in December 2004.

The FIIs entry into the side counters saw the CNX Mid-cap index and the BSE 500 index outperforming the benchmark indices, the Nifty and the BSE Sensex.

While the Nifty and the BSE Sensex appreciated by just around 19 per cent, the NSE mid-cap index appreciated by a big 76 per cent in the last one year. Even the BSE-500 outperformed the benchmark indices, with 27 per cent returns in the last one year.

The FIIs stepped up its holding in mid-cap and small-cap stocks through fresh buying in existing portfolio and through expansion of their portfolio. The number of mid-cap and small-cap companies in FIIs' portfolio increased from 507 in March 2003 to 664 in March 2004 and 764 in December 2004.

In the last two year or so, the FIIs have bought over 1,300 million shares of mid-cap and small-cap stocks from the open market as well as from public offers taking their buying in these stocks to 2,021 million shares.

The FIIs stepped up holding from 715 million shares in March 2003, to about 1,666 million shares in March 2003 and 2,021 million shares in December 2004. In the CNX mid-cap alone, the FIIs buying improved by a huge 300 million shares, from 151 million shares in March 2003 to 453 million shares in December 2004.

Meanwhile, the FIIs slowed down their buying in frontline index stocks after their new found love for mid-cap and small-cap stocks.

The FIIs holding in CNX Nifty stocks increased by 64.8 per cent in the same period, from 9.07 per cent of the total outstanding shares of Nifty companies in 2003 to 14.95 per cent of the total in December 2004.