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Ownership analysis – DII stake in Nifty-500 at seven-quarter low

FII/DII ownership ratio unchanged at 1.6x; FIIs/DIIs raise stakes in Healthcare

* Benchmark indices Nifty-50 and Nifty Midcap-100 have recovered from their Mar’20 lows with gains of 95% and 123% (up 6% and 18% YTD CY21), respectively.

* Divergent sequential trends are seen between FII and DII purchases. FIIs increased weights in two-thirds of the sectors (Telecom, Metals, Consumer Durables, Real Estate, and Cement), while DIIs trimmed weights QoQ.

* Notably, in the Mar’21 quarter, FIIs posted inflows of USD7.3b, whereas DIIs recorded outflows of USD3.2b.

* In this report, we dive deep into the ownership of various sectors/companies in the Nifty-500 to see how this has changed in 4QFY21.

FII ownership in Nifty-500 up 160bp YoY

* FII holdings in the Nifty-500 were back at pre-COVID levels in 4QFY21 – they declined a marginal 20bp QoQ, but increased 160bp YoY to 22.3%. DII holdings in the Nifty-500 were down 10bp QoQ / 50bp YoY to 14.2%.

* FIIs increased ownership in 57%/64% of Nifty-500/Nifty-50 companies QoQ, while DIIs decreased stake in 56%/62% of Nifty-500/Nifty-50 companies QoQ.

* A mixed trend was seen in promoter stake holdings – a marginal increase of 10bp QoQ (down 120bp YoY to 49.4%). Promoter stake in SAIL, Tata Communications, Bank of Baroda, WABCO India, Godrej Properties, Ircon International, Max Healthcare, and Rail Vikas Nigam reduced due to stake sales and capital raising exercises. Tata Motors, HPCL, IndusInd Bank, and Godrej Industries posted an increase in promoter stake QoQ.

* As a proportion of the free float of the Nifty-500, FII/DII ownership decreased a marginal 30bp/20bp QoQ to 44.1%/28.1%. Notably, FII ownership rose 220bp YoY, whereas DII ownership declined 180bp YoY.

* The FII-DII ownership ratio in the Nifty-500 remained at 1.6x in 4QFY21 (unchanged from the previous quarter).

* In the last year, the FII-DII ratio increased in the Insurance, Utilities, Retail, Oil & Gas, Consumer Durables, Metals, Private Banks, Healthcare, Automobiles, Capital Goods, and Cement sectors. Real Estate, Telecom, and NBFC posted declines.

Sector holdings: FIIs post highest QoQ change in Telecom, Metals, Consumer Durables; DIIs recorded only in Consumer, Healthcare, PSU Banks

* In the Nifty-500, FIIs have the highest ownership in Private Banks (47.9%), followed by NBFCs (32.9%), O&G (23.1%), Insurance (22.2%), and Real Estate (21.5%). DIIs have the highest ownership in Capital Goods (21.9%), Private Banks (20.4%), Metals (18.3%), Consumer Durables (17.8%), and PSU Banks (17.6%).

* Sequentially, FIIs increased stake in Telecom (+130bp), Metals (+100bp), Consumer Durables (+100bp), Real Estate (+80bp), Cement (+60bp), Chemicals (+60bp), Insurance (+50bp), and Healthcare (+40bp). In contrast, FIIs reduced stake in NBFCs (-40bp), Auto (-30bp), Consumer (-20bp), and Technology (- 10bp).

* On a QoQ basis, DIIs increased stake in Consumer (+30bp), Healthcare (+20bp), and PSU Banks (+20bp). Utilities (-120bp), Consumer Durables (-90bp), Capital Goods (-50bp), and Telecom (-50bp) were the major sectors where DIIs reduced stake by more than 50bp.

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