FIIs up stake in bank, sugar firms

Foreign institutional investors (FIIs) have raised their stakes in bank and sugar sectors during the quarter ended March 2006.

The biggest increase in FII stake has been in South Indian Bank"" from 4.19 per cent to 18.48 per cent. Last month, Goldman Sachs Investments and India Capital Fund had picked up the 6.7 per cent stake held by ICICI Bank in South Indian Bank.

The other banks, which saw a substantial rise in FII holdings, were Syndicate Bank, Bank of India, Corporation Bank, Canara Bank, Andhra Bank, Karnataka Bank, HDFC Bank, Indian Overseas Bank and Kotak Mahindra Bank.

"FIIs want to increase their exposure to bank stocks as in most frontline banks such as SBI and PNB the limits have been exhausted," said a banking analysts with a domestic broking firm.

Foreign investors have also hiked their stakes in sugar companies. Among the leading sugar players, FII have increased their stake in Balrampur Chini Mills, Bajaj Hindustan. Uttar Pradesh-based Mawana Sugars saw FIIs raising their stake from a mere 1.02 per cent in the December quarter to 5.39 per cent in March. Dwarikesh Sugars has also caught the fancy of FIIs.

Explaining the increased interest in Bajaj Hindustan, Balrampur Chini and Mawana Sugars, Kapil Bagaria of Sushil Finance & Stockbrokers said, "These companies are planning massive expansions. They have capex targets of more than Rs 500 crore each. Incentives from the Uttar Pradesh government will boost margins. So these counters are attracting FII attention." Dwarikesh Sugar has been rising purely on valuation grounds.

Of the 450 firms, for which shareholding pattern for March quarter is available, FIIs have upped their stakes in 130-odd companies. Apart from banking and sugar they have hiked stakes predominantly in sectors such as pharmaceuticals, engineering, fertilisers, auto ancillaries, finance and telecommunications.

From January to March, foreign institutional investor holdings in mid cap and small cap companies have recorded a substantial rise. The keen interest foreign investors are showing in the medium and small sized companies lends breadth to the current rally. The bull run this time around is not just confined to front-line companies but medium sized companies which look promising.

Some other midcap stocks which attracted FII interest are Provogue, FAG Bearings, Prism Cements, Bajaj Auto Finance, Dishman Pharma, D S Kulkarni Developers and Triveni Engineering.

During the current calender year, FIIs have pumped in Rs 17,822 crore into the Indian equity markets. In January, February and March, FII inflows were Rs 3221 crore, Rs 7572 crore and Rs. 6532.30 crore, respectively. Fresh inflows in April have touched Rs 497.40 crore.