)
Foreign institutional investors (FIIs) have pulled out over $3 billion from the Indian equity markets so far in the past three months beginning June 2013. This is their second biggest outflow in the last five years.
20% depreciation in the rupee after the US Fed Reserve Chairman Ben Bernanke hinted at a possible withdrawal of the quantitative easing programme in the near future has seen the FIIs withdraw $3.54 billion, or Rs 21,554 crore, between June and August 27, 2013, the Sebi data shows.
Earlier, between May and November 2008 (seven month period), FIIs had pulled out $9.6 billion, or Rs 43,875 crore, from Indian equities market when the country suffered the after-effect of the financial crisis triggered by the collapse of Lehman Brothers in the US. Indian rupee depreciated by nearly 23% against the dollar during the same period.
The recent carnage has seen the BSE benchmark index – S&P BSE Sensex decline nearly 9%, while the NSE CNX Nifty has plunged about 12% from their respective May 31, 2013 level.
“The passing of the populist food security bill by an ordinance, events in Telengana (awarded status of a separate state) and increased activity by major parties on various social media platforms allude to undercurrents of preparation for elections. The election announcement and the run up to the elections would be marked with bouts of volatility as investors, especially the FIIs, would prefer to wait and watch before they take a fresh call on the markets. There would be greater uncertainty on core macroeconomic issues as the focus would shift from economic policies to politics,” said an analyst from a domestic brokerage.
Financials bleed
The companies along with banks having high FIIs holdings have seen the sharpest erosion in their market value.
Federal Bank, YES Bank, Shriram Transport Finance, Housing Development Finance Corporation, IDFC, Axis Bank, IndusInd Bank and ICICI Bank have declined more than 25% each during the period. FIIs held more 35% stake in these companies at the end of June 30, 2013 quarter.
| FIIs stake | ||||||
| Name | in % | 31-May-13 | 28-Aug-13 | %chg | ||
| Educomp Sol. | 28.79 | 55.50 | 18.00 | -67.57 | ||
| Yes Bank | 46.03 | 487.45 | 225.90 | -53.66 | ||
| I D F C | 52.19 | 144.35 | 80.10 | -44.51 | ||
| NCC | 37.46 | 31.30 | 17.80 | -43.13 | ||
| Federal Bank | 44.34 | 449.45 | 256.85 | -42.85 | ||
| Axis Bank | 40.70 | 1430.65 | 838.70 | -41.38 | ||
| REI Agro | 35.58 | 13.99 | 8.45 | -39.60 | ||
| Sobha Developer. | 33.46 | 393.40 | 244.85 | -37.76 | ||
| Shriram Trans. | 49.74 | 815.35 | 508.95 | -37.58 | ||
| LIC Housing Fin. | 32.00 | 256.00 | 162.50 | -36.52 | ||
| Top losers in FIIs having stake over 25% as on June 30. | ||||||
| Price on BSE in Rs | ||||||
| Source: CapitalinePlus | ||||||
| Data compiled by BS Research | ||||||
“Bank stocks have been sold down sharply over the past month on fears of huge losses in their investment books and a further deterioration in asset quality due to rising interest rates and tight liquidity. As a result, most of the PSU banks are trading at close to decade-low PBR (price-book value ratio) valuations. While concerns about the currency will likely continue to be a medium-term overhang, the recent measures by the RBI should provide some respite,” said Punit Srivastava and Yash Modi of Daiwa Capital Markets.
Among the large PSU banks, their top picks are Punjab National Bank and Bank of Baroda, while ICICI Bank and Axis Bank remain as top picks in the private banking space.
Meanwhile, out of BSE-500 companies that account for 94% of total BSE market capitalisation, more than half or 286 stocks declined by over 15%. Of these, the market price of 21 stocks more than halved and 153 fall in the range of 25-50%.
The aggregate market capitalisation of these 500 companies has declined by massive nearly Rs 833,000 crore to Rs 5,505,859 crore today.
However, information technology (IT) shares buck the trend by surging over 25% during the period due to fall in Indian rupee. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Among the individual stocks, Wipro and Tech Mahindra has rallied over 40% each, while HCL Technologies and Infosys gained 30% each and TCS by 27% since June.
