The Hindu Business Line : Significant churn in FII stakes in December quarter

Foreign Institutional Investors have significantly churned their equity stakes in Indian companies in the period between September 30, 2007, and December 31, 2007, hiking their stakes in about 200 of the CNX 500 companies, while cutting stakes in an equal number.

An analysis of shareholding pattern for the CNX 500 constituents for this period suggests that FIIs have taken a stock-specific rather than a sectoral view in rejigging their positions.

Significant divergence

FIIs chose to peg up their stakes in Sintex Industries, United Phosphorus, Monnet Ispat, Punj Lloyd and Nicholas Piramal.

On the other hand, BEML, Sakthi Sugars, Indiabulls Financial and Lumax were some of the stocks where they significantly trimmed their stakes.

There was significant divergence in FII preferences within each sector. For instance, while sugar stocks such as Shree Renuka Sugars and Balrampur Chini Mills saw significant increases in FII holdings, Sakthi Sugars saw reduced FII holdings.

Within the technology sector, FIIs appear to have used weakening stock prices to step up exposure to tier-I players such as TCS and Satyam Computer as well as niche players such as Educomp and Infotech Enterprises.

But they have sharply trimmed stakes in mid-tier players such as Hexaware, Mastek and Aztecsoft in this period.

In financials, IDFC and Indiabulls Financial saw declines in FII stakes, while City Union Bank and Kotak Mahindra Bank saw FIIs add to their holdings in this period.

Significant selling

While this data captures FII action for the September-December 2007 period, FIIs have indulged in significant selling on the Indian bourses since January this year and this could have resulted in a significant change in the above positions, after the date of disclosure.

Among the stocks that were accumulated by FIIs in the preceding quarter, some such as Nicholas Piramal and United Phosphorus have contained the declines in price well during the recent corrective phase.

However, FII picks such as Sintex Industries, Punj Lloyd and Nagarjuna Construction have registered much sharper declines than the Sensex.

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