Despite mid-cap rally, FPIs bond with blue chips

Lower liquidity in smaller cos makes it expensive for foreign investors to buy or exit them

Despite the rally in mid-caps for the past three years, overseas investors continue to show their preference for blue chips.

In the past five financial years, nearly three out of every four dollars, or about 75 per cent of the money put in by foreign portfolio investors (FPIs), have been invested in the top 10 per cent of the BSE 500 companies with the highest market capitalisation.

For instance, the top 50 companies by market capitalisation made up 71 per cent of the total FPI investment in the BSE 500 universe, the shareholding pattern for the quarter ended March 2017 shows. In