In the December quarter, it is not only the stakes of foreign portfolio investors (FPIs) in Indian companies that went down, but promoter share also fell for the second time in a row, taking their ownership in Nifty50 companies to the lowest level in more than two decades, according to data analysed by the National Stock Exchange.
FPI share in ownership of Nifty50 companies fell to a 12-year low of 24.3 per cent, and to a 13-year low in listed companies at 17.4 per cent. However, their share in ownership of Nifty 500 index remained steady — an obvious indicator of their relentless selling of large-cap shares.
Promoters have been selling stake in companies they own and according to the data, total promoter ownership in NSE-listed and Nifty 500 companies declined by 67 bps and 92 bps quarter-on-quarter to 50.4 per cent and 49.6 per cent, respectively, marking the second consecutive decline after four quarters of steady gains, NSE said.
“The decline was broad-based across all promoter categories, with the most significant reduction seen in the Government holding,” it said, pointing out that in the Nifty50 universe the drop was more pronounced at 96 bps qoq bringing promoter ownership to 41.4 per cent, its lowest level in more than two decades.
The drop in ownership share by FPIs and promoters was accompanied by a simultaneous increase by domestic mutual funds, who have been picking up the slack. Their share has increased to a record 10 per cent, investors keep pumping money into schemes in monthly instalments.
FPI selling
After inching up marginally in the September quarter, FPI ownership in NSE listed, and Nifty 50 companies fell on the back of significant outflows by FPIs in the December quarter, amounting to $11.9 billion. In value terms, FPI holding in NSE listed companies dipped by 8.3 per cent qoq to ₹75.8 lakh crore, marking the first quarterly drop in the last seven quarters, NSE said.
The study noted that FPIs strengthened their outsized bet on financials, remained positive on communication services, turned incrementally more cautious on consumption and commodity-oriented sectors such as energy, materials, and consumer staples and maintained a perennially negative stance on industrials.
Among other sectors, FPIs retained a neutral stance on consumer discretionary, healthcare, information technology, utilities, and real estate.
Retail ownership
Individual investors ownership inched up by 20 bps QoQ in the NSE listed companies to a 70-quarter high of 9.8 per cent, corroborating with record investments of Rs 56,000 crore in the December quarter.
Their holding in the Nifty 500 universe rose by a modest 12bps qoq to 8.8 per cent, while that in the Nifty 50 Index remained steady at 8 per cent, reflecting the impact of relative outperformance of mid and small-cap companies and incrementally higher investments in such companies.
NSE said the strong performance of Indian equities, coupled with rising participation, has resulted in a significant increase in household wealth over the last few years. “Our estimates suggest that the household wealth in Indian equities increased by over ₹46 lakh crore in the last five years, and ₹30 lakh crore in the last two years.”
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