Market sways to FIs' tune

FIIs net sellers, no longer calling the shots; LIC emerges as bulwark.

Domestic institutions and foreign institutional investors (FIIs) are swapping roles on the Indian bourses, with the benchmark indices now playing the Life Insurance Corporation of India (LIC) tune.

Far from being the bulk buyers in the markets, FIIs are now bulk sellers. Moreover, their sales are no longer moving the markets.

A reading of the shareholding pattern of the Bombay Stock Exchange (BSE) Sensex stocks for the April-June 2004 quarter indicates that FIIs are no longer calling the shots.

The domestic financial institutions (mainly LIC) and high net worth individuals have become the bulwark against significant FII selling.

The role reversal is most obvious in scrips such as Tata Steel, Tata Power, Tata Motors, Bharti Tele-Ventures, Hindalco, HPCL, BHEL, Hindustan Lever, Bajaj Auto and Reliance Industries.
 

Who's buying, selling?
	Shares bought/sold in April-June 04*
	FIs	Public	FIIs
Tata Steel	6.27	7.71	-13.65
Reliance Ind	5.17	2.09	-9.08
Hindustan Lever	10.79	-3.08	-6.38
Tata Power	2.83	2.24	-5.76
Tata Motors	6.10	1.18	-4.99
Bharti Tele-Ventures	5.56	1.67	-2.78
Dr Reddy's Labs	1.94	0.66	-1.57
Infosys Technologies	0.17	4.95	-1.30
HPCL	3.63	0.10	-1.22
BHEL	16.89	-0.02	-10.77
*million shares

Heavy FII purchases in these scrips had taken their prices to dizzy levels, but foreign investors are now exiting these stocks. Domestic institutional buying in these stocks is keeping the prices from plummeting.

For instance, shareholding data for the quarter ended June 2004, compared with the data for the quarter ended March 2004, show that FIIs sold 13.65 million shares of Tata Steel, which were lapped up by FIs (6.3 million shares) and the public (7.7 million shares).

Similarly, FIIs sold 9.1 million shares of Reliance Industries during the quarter. Of this, 5.2 million shares were bought by FIs and another 2.1 million by the public.

LIC stepped into the FIIs' shoes during the quarter, buying 4.8 million shares of Tata Motors, 4 million shares each of Tata Steel and Reliance Industries, 1 million shares of Tata Power, around 1.3 million shares each of Bajaj Auto and Dr Reddy's Laboratories.

Financial institutions bought an aggregate 109.4 million shares of 25 Sensex stocks and sold 7.3 million shares of five Sensex stocks. The public bought 40.2 million shares of 15 Sensex stocks and sold 26.4 million shares of the other 15.

After relentless buying in almost all Sensex stocks in 2003-04, the FIIs were net sellers in 18 Sensex stocks in the quarter ended June 2004.

The FIs, which had booked profits in all Sensex stocks during 2003-04 were net buyers in 25 Sensex stocks during the last quarter. High net worth individuals and the public were net buyers in 15 Sensex stocks during the quarter.

Thanks to their participation in the ICICI Bank public issue and the ONGC open offer for sale, FII net buying in Sensex stocks totalled 21.6 million shares in April-June 2004.

However, excluding the 45.5 million shares allotted to them in the ICICI Bank public offer, FII were net sellers in the April-June quarter.