After the Indian market corrected nearly 30 percent between February-April, foreign institutional investors (FII) became cautious and reduced more than half of their stake in the Nifty-500 index, which now trades at a 5-year low.
The index has declined 140 bps QoQ/80 bps YoY to 21 percent in Q4FY20. It simply means that the foreign investors have reduced ownership in 67 percent of Nifty-500 companies.
Financials have had a dominant run in the last few years with FIIs being majorly overweight on BFSI (Private banks, NBFCs, insurance and PSU banks). As of December 2019, FII allocation to BFSI was 45 percent in the Nifty-500. Post correction, it has reduced to 39.8 percent.
In terms of absolute holdings, out of total FII holding of $310 billion, private banks is at the top with $72 billion investment value.
Looking at the selling spree of FII holdings, promoters took an advantage of this sharp correction and raised their ownership in Nifty-500 companies, by 130 bps QoQ to 50.5 percent in Q4FY20.
Moreover, in case of Nifty-50 companies, FIIs have till now reduced 90 percent of their stake QoQ, while DIIs have increased their stake in 78 percent of India's top-50 companies.
Bharti Airtel and Zee Entertainment remained top buying stocks for the FIIs sequentially while Eicher Motors, Axis Bank, Tata Steel, ICICI Bank and Grasim witnessed a decline in FII holding.
Furthermore, DIIs increased their holding in Power Grid, Eicher Motors, NTPC, Coal India and ONGC.
Overall, FIIs holding is distributed majorly in these 5 sectors- BFSI (39.8 percent), Technology (12.2 percent), Oil & Gas (10.6 percent), Consumer (10.4 percent) and Healthcare (4.7 percent).
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