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Ownership analysis – Institutional stake moderates in 1QFY22

FIIs/DIIs raise stakes in Consumer Durables

* Equity markets have seen strong rally in CY21 and Nifty-50 and NSE Midcap-100 are up 13%/32% YTD’21.

* Within the NSE-500, we see divergent sequential trends between FII and DII purchases. DIIs raised weights in Automobiles, Insurance, NBFCs, Oil & Gas, and Real Estate, while FIIs reduced weights QoQ. On the other hand, FIIs increased weights in Capital Goods, Chemicals, and Consumer, whereas DIIs trimmed weights QoQ.

* FIIs and DIIS posted inflows of USD0.8b and USD2.7b in 1QFY22, respectively.

* In this report, we dive deep into the ownership of the various sectors/companies in the Nifty-500 to see how this changed in 1QFY22.

FII ownership in Nifty-500 down 60bp QoQ

* FII holding in the Nifty-500 is down 60bp QoQ/+90bp YoY to 21.7% in 1QFY22. DII holding in the Nifty-500 was down10bp QoQ / 70bp YoY to 14.1%.

* FIIs increased ownership in 52%/54% of Nifty-500/Nifty-50 companies QoQ, while DIIs increased stake in 45%/50% of Nifty-500/Nifty-50 companies QoQ.

* A mixed trend was observed in promoter holdings – an increase of 50bp QoQ (down 50bp YoY to 49.9%). Promoter stake in Coforge, Indian Bank, Union Bank, Crompton Greaves Consumer, TVS Motor, and HDFC Life Insurance declined on account of stake sales and capital raising exercises. Conversely, United Breweries, Vedanta, and Tata Motors posted an increase in promoter stake QoQ.

* As a proportion of the free-float of the Nifty-500, FII ownership decreased 70bp QoQ to 43.4%, while DII remained unchanged at 28.1%. Notably, FII ownership rose 150bp YoY, whereas DII ownership declined 180bp YoY.

* The FII-DII ownership ratio in the Nifty-500 declined marginally to 1.5x in 1QFY22 (from 1.6x in the previous quarter).

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

Sector holdings: FIIs/DIIs – highest QoQ change in Consumer Durables; decline in PSU Banks, Metals, Retail, and Utilities

* In the Nifty-500, (i) FIIs have the highest ownership in Private Banks (48%), followed by NBFCs (31.5%), Oil & Gas (22.5%), Insurance (21.6%), and Real Estate (21%), and (ii) DIIs have the highest ownership in Capital Goods (21%), Private Banks (21%), Consumer Durables (18.5%), Metals (17%), and PSU Banks (16.5%).

* Sequentially, FIIs increased stake in Consumer Durables (+60bp), Consumer (+30bp), Chemicals (+30bp), Healthcare (+20bp), Private Banks (+10bp), and Capital Goods (+10bp). In contrast, they reduced stake in NBFCs (-140bp), Telecom (-70bp), Oil & Gas (-60bp), Insurance (-60bp), Real Estate (-50bp), Auto (-40bp), Utilities (-40bp), PSU Banks (-30bp), Metals (-20bp), and Retail (-10bp).

* On a QoQ basis, DIIs increased stake in Consumer Durables (+70bp), Private Banks (+60bp), Real Estate (+60bp), Auto (+40bp), Insurance (+20bp), Oil & Gas (+20bp), NBFCs (+10bp), and Technology (+10bp). On the other hand, they lowered stake in Metals (-140bp), PSU Banks (-110bp), Consumer (-100bp), Capital Goods (-90bp), Retail (-80bp), Chemicals (-60bp), and Utilities (-30bp)

FII allocation in BFSI down for second consecutive quarter

* Financials has had a dominant run over the past few years. However, BFSI’s (Private Banks, NBFCs, Insurance, and PSU Banks) underperformance has continued to reflect in the FII allocation – down to 38% in the Nifty-500 as of Jun’21, from 45.1% in Dec’19 and 40% in Mar’20. This has resulted in the trimming of weight by 130bp QoQ. However, FIIs remain significantly overweight by 740bp in BFSI v/s the Nifty-500 (BFSI’s weight in the Nifty-500 currently stands at 30.5%).

* BFSI is followed by Technology, which has 13.1% weight (up 40bp QoQ / 180bp YoY). Technology is followed by Oil & Gas (10.5%) and Consumer (7.6%). Overall, the Top 5 sectoral holdings of FIIs in the Nifty-500 account for 74.5% of the total allocation – BFSI (38%), Technology (13.1%), Oil & Gas (10.5%), Consumer (7.6%), and Healthcare (5.3%).

* FIIs are significantly overweight (v/s Nifty-500) in Private Banks / NBFCs and underweight in Consumer, Capital Goods, Metals, Healthcare, and PSU Banks.

* On a QoQ basis, FIIs have increased weights in Healthcare, Technology, Metals, Chemicals, Insurance, PSU Banks, Retail, Capital Goods, and Consumer. Private Banks, NBFCs, Oil & Gas, Cement, Telecom, and Automobiles have seen a reduction.

* In terms of absolute holdings, of the total FII holdings of USD631b, Private Banks stands at the top with USD141b in investment value. The Top 5 companies that contribute 35% to the holding value are HDFC Bank (USD56.8b), Reliance Industries (USD51.7b), HDFC (USD43.7b), ICICI Bank (USD35.1b), and Infosys (USD30.8b).

DIIs overweight in PSU Banks, Metals, and Capital Goods

* Using the Nifty-500 as the benchmark, DIIs are significantly overweight in PSU Banks, Metals, Capital Goods, Utilities, and Oil & Gas and underweight in NBFCs, Private Banks, and Technology.

* Overall, the Top 5 sectoral holdings of DIIs in the Nifty-500 account for 65% of the total allocation – BFSI (27.4%), Technology (11.8%), Oil & Gas (9.8%), Consumer (9.7%), and Healthcare (6.3%).

* In 1QFY22, DIIs increased weights in the following sectors on a QoQ basis: Healthcare (+50bp), Metals (+50bp), Technology (+30bp), PSU Banks (+20bp), Chemicals (+20bp), NBFCs (+10bp), and Automobiles (+10bp). They reduced weightS in Consumer, Private Banks, Cement, Retail, Capital Goods, Utilities, and Telecom.

* Of the total DII holdings of USD409b in the Nifty-500, Private Banks stands at the top with USD62b, followed by Technology with USD48b and Oil & Gas with USD40b.

* The top 5 stocks by holding value are Reliance Industries (USD24.5b), Infosys (USD20.1b), HDFC Bank (USD19.7b), ICICI Bank (USD19.5b), and ITC (USD14.3b).

Nifty-50: FIIs raise holdings in 54% of stocks, DIIs in 50% of stocks

* FIIs raised stake in 54% of Nifty-50 companies on a QoQ basis and DIIs in 50% of Nifty-50 companies.

* Tata Steel, Tata Motors, Cipla, NTPC, M&M, Axis Bank, and IndusInd Bank were the top stocks to see an increase of more than 1% in FII holdings on a QoQ basis.

* SBI Life Insurance, Hero MotoCorp, Adani Ports, Tech Mahindra, BPCL, Kotak Mahindra Bank, and ITC were the top stocks to see declines in FII holdings by more than 1% on a QoQ basis.

* DII holdings in Nifty stocks increased the most in SBI Life Insurance, Tech Mahindra, Hero MotoCorp, Tata Consumer, and Kotak Mahindra Bank – by more than 1% on a QoQ basis. Tata Steel, Titan Company, M&M, Infosys, and NTPC posted declines in DII holdings by more than 1% on a QoQ basis.

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