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FII allocation in BFSI declines for the fifth consecutive quarter

* The Nifty ended FY22 with 19% YoY gain, marking another year of strong returns despite the multitude of challenges.

* Within the NSE-500, FII and DII purchases depicted divergent sequential trends. On a QoQ basis, DIIs increased their holdings in all sectors except Capital Goods. Conversely, FIIs increased their holdings in only five sectors – Metals, Telecom, Utilities, PSU Banks and Chemicals.

* FIIs and DIIs posted flows of -USD13.5b and +USD11.5b, respectively, in 4QFY22.

* In this report, we delve deep into their ownership of various sectors/companies in the Nifty-500 and see how their holdings evolved in 4QFY22.

FII holding in Nifty-500 declines 40bp QoQ and 210bp YoY

* FII holding in Nifty-500 was down 40bp QoQ/210bp YoY to 20.3% in 4QFY22. DII holding in Nifty-500, however, was up 70bp QoQ/30bp YoY to 14.5%.

* FIIs reduced their ownership in 60%/72% of Nifty-500/Nifty-50 companies QoQ, while DIIs raised their stake in 58%/72% of Nifty-500/Nifty-50 companies, respectively.

* A mixed trend was observed in promoter holdings. The holdings remained unchanged QoQ, but rose 60bp YoY to 50%. Promoter stakes in Restaurant Brands Asia, Max Healthcare, Coforge, Equitas Small Finance Bank, Poonawalla Fincorp, and JK Cements declined QoQ due to stake sale and capital raising exercises. Conversely, Sterling & Wilson Renewable Energy, CG Power & Industrial Solutions, Dhani Services, Vodafone Idea, and L&T Finance Holdings witnessed a QoQ increase in promoter stakes.

* As a proportion of the free-float of the Nifty-500, FII ownership decreased 90bp QoQ to 40.5%, while DII increased 130bp QoQ to 29%. Notably, FII ownership declined 370bp YoY, whereas DII ownership increased 90bp YoY.

* The FII-DII ownership ratio in the Nifty-500 declined to 1.4x in 4QFY22 (from 1.6x in 4QFY21).

* Over the last one year, the FII-DII ratio has increased in Utilities, Metals, Consumer Durables, and Capital Goods, but has decreased in Insurance, Real Estate, NBFCs, Private Banks, Retail, Automobiles, Healthcare, Cement, Telecom, and Oil & Gas

Sector holdings: FIIs/DIIs witness QoQ increase in Telecom, Utilities, PSU Banks and Chemicals; and QoQ dip in Capital Goods

* In the Nifty-500: (i) FIIs have the highest ownership in Private Banks (45.2%), followed by NBFCs (27.4%), Oil & Gas (22.6%), Insurance (20.5%), and Technology (19.2%), while (ii) DIIs have the highest ownership in Private Banks (24.1%), Capital Goods (20.4%), PSU Banks (18.7%), Consumer Durables (17.9%), and Automobiles (16.9%).

* On a QoQ basis, FIIs increased their stakes in Metals (+130bp), Telecom (+70bp), Utilities (+50bp), PSU Banks (+30bp), and Chemicals (+10bp). Conversely, FIIs reduced their stakes in NBFCs (-190bp), Insurance (-120bp), Cement (-110bp),

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