Foreign institutional investors (FIIs) have raised their stakes in India Inc by acquiring close to two of every five equity shares held by the public (known as free float in market parlance) in the top 100 listed firms. An analysis of the September quarter shareholding pattern of BSE 100 companies, which account for 72 per cent of the total market capitalisation of the Bombay Stock Exchange, showed the share of FIIs in free-float market capitalisation touched a six-year high of 37.95 per cent, up from 35.48 per cent at the beginning of 2012.
That was higher than their share of 37.43 per cent at the end of December 2007, when the Sensex was flirting with the 20,000-mark. FII holdings in 11 of the top 50 companies that comprise the Nifty index are also at record high levels.
Analysts see the rising FII holding as a positive sign that could be a harbinger for a new rally. In the previous bull market, the FII holding reached a peak much ahead of share prices hitting their peak. In December 2006, FII holding in BSE 100 companies hit a high of 38.54 per cent, whereas the Sensex hit a high almost a year later in December 2007-January 2008. Going by this logic, a new bull market may lie ahead, feel some analysts.
| PUMPING IN THE DOLLARS | ||||
| Company | FIIs holding# | Price in Rs | ||
| Sept | % chg* | 5-Nov | % chg* | |
| Cairn India | 16.17 | 10.0 | 330.10 | 5.3 |
| HDFC | 68.72 | 9.7 | 768.90 | 18.4 |
| Cipla | 20.79 | 7.7 | 380.45 | 19.1 |
| Godrej Consumer | 27.43 | 7.5 | 688.30 | 78.7 |
| Tata Global | 16.52 | 6.7 | 158.50 | 75.7 |
| IDFC | 51.19 | 5.4 | 166.35 | 81.3 |
| HDIL | 39.82 | 4.6 | 100.00 | 87.6 |
| Titan Inds. | 17.32 | 4.2 | 290.30 | 70.0 |
| UltraTech Cem | 20.10 | 4.0 | 2,012.00 | 73.4 |
| Tata Motors | 28.03 | 3.9 | 269.70 | 51.2 |
| *Change over December 31, 2011; #: in percentage points; companies in the order of change in FII holding Source: Capitaline Plus; Data complied by BS Research | ||||
“The inflow has been very robust in 2012, even when the economy was still not doing well and no major rate cut happened. The FII action clearly indicates a new bull market is likely to set in, which may take the Nifty past 6,300 in 2013,” said Kishor Ostwal, CMD, CNI Research.
A K Prabhakar, senior vice-president (equity research), Anand Rathi, agreed. “FIIs raising stake is positive, as any liquidity-driven rally benefits India the most.”
Analysts suggest India remains an attractive market, with the Sensex currently trading at a discount to its peak valuations of January 2008. FIIs have infused a net amount of Rs 94,381 crore so far in 2012 and have made more than half or Rs 51,972-crore investments since July on the back of reforms initiated by the government.
