 "mutual fund")
Strong net inflows have propelled domestic mutual funds (MFs) ownership in National Stock Exchange (NSE)-listed companies to reach a fresh record high during the 2023-24 October-December quarter (third quarter, or Q3).
The shareholding of MFs in companies listed on the NSE rose to 8.81 per cent from 8.73 per cent in the previous quarter, driven by net inflows worth Rs 58,198 crore, according to primeinfobase.com.
However, the share of domestic institutional investors (DIIs) declined marginally to 15.96 per cent in December from 15.99 per cent in the July-September quarter.
The share of foreign portfolio investors (FPIs) also decreased to 18.19 per cent in Q3 from 18.4 per cent in September despite net inflows of Rs 50,588 crore. The combined share of institutional investors (FPIs + DIIs) declined to 34.15 per cent from 34.39 per cent in the previous quarter.
The gap between FPI and DII holdings narrowed to an all-time low in December, with DII holdings being 12.2 per cent lower than FPI holdings.
The FPI-to-DII ownership ratio also hit an all-time low at 1.14 in Q3. The widest FPI-to-DII holding gap was at 49.8 per cent on March 31, 2015.
More From This Section
During the quarter, both domestic and foreign institutions increased their stake in utility stocks and trimmed their positions in finance companies. Domestic institutions raised their stake in utility stocks to 3.3 per cent in December from 2.9 per cent in September. Meanwhile, they reduced their positions in finance stocks from 27.6 per cent to 26.9 per cent.
FPIs increased their allocation in utility stocks from 3.4 per cent to 3.8 per cent, while they decreased their allocation in financial services from 31.9 per cent to 30.9 per cent.
The share of Life Insurance Corporation (LIC) of India, India’s largest institutional investor, declined to an all-time low of 3.6 per cent from 3.7 per cent in the previous quarter.
Pranav Haldea, managing director of PRIME Database, mentioned that the decline in LIC’s share was largely due to profit booking to take advantage of bullish markets. Insurance companies sold a net of Rs 15,622 crore during the quarter, a significant portion of which was LIC holdings.
LIC commands at least a 68 per cent share of Rs 13.02 trillion investments in equities by insurance companies.
The share of the government as a promoter rose to a six-year high at 9.4 per cent in Q3. However, over 15 years, the government’s stake has considerably declined from 22.5 per cent in June 2009, primarily due to the government’s disinvestment programme and the absence of new listings.
The share of private promoters fell to a five-year low of 41.3 per cent. In the past year alone, it fell 330 basis points to 44.6 per cent in September 2022.
Haldea said that apart from stake sales by promoters to cash in on the bull market, the relatively lower holding in some of the companies making their market debuts and the overall institutionalisation of the market are the reasons for low promoter holdings.
Meanwhile, the share of retail investors (those with holdings up to Rs 2 lakh) fell marginally to 7.6 per cent in Q3 from 7.62 per cent in September.
Retail investors sold shares worth Rs 12,163 crore in December. The overall stake of high networth individuals in listed companies marginally rose to 2.06 per cent in Q3 from 2.05 per cent in September.
There were 13 companies that saw an increase in the holdings of promoters, FPIs, and DIIs, and they are Westlife Foodworld, Gujarat Narmada Valley Fertilizers & Chemicals, Wonderla Holidays, Ami Organics, Thangamayil Jewellery, and Unichem Laboratories.
