Motilal Oswal Financial Services has said in a report that the holding of foreign investors in the Nifty 500 index has reached a low of 6 quarters in the quarter ended December 31. Foreign institutional investors have pulled out around $5 billion from Indian markets during this period.
An analysis of shareholding data shows that FPI holdings in Nifty 500 companies have come down from 21.5 per cent in the September quarter to 20.9 per cent in the December quarter. FPI holdings in Nifty 500 companies have seen a decline for the fourth quarter in a row, amid concerns over costlier Indian equities vis-a-vis the global market. Due to the expensive valuation of the Indian market, foreign investors have been seen turning to other markets in the hope of earning good earnings.
Let us inform that this sell-off in the Indian markets has been contrary to the assessment of the market, which had been estimated that due to the increase in government intervention in China as well as the sell-off in technology stocks, foreign investors are now turning their funds towards the Indian markets. We will turn to the side but in reality we did not see anything like this happening.
Significantly, most of the selling by foreign investors has been in financial stocks. In the December quarter, the share of foreign investors in the shares of this sector has reached a low of 20 quarters and has been at 35 per cent. Let us tell you that in the same quarter two years ago, the share of foreign investors in financial stocks stood at 45.2 percent.
Apart from financial services companies, foreign investors have reduced their stake in telecom, information technology, retail, cement, automobiles, metals and energy companies in the December quarter.
While foreign investors have been net sellers, domestic institutional investors have been net buyers in the December quarter. Domestic institutional investors bought over $8 billion in the December quarter, taking their overall holding in the Nifty 500 index to 14 per cent.
In the December quarter, domestic institutional investors increased their holdings in 53 per cent of the Nifty 500 stocks, while they increased their holdings in 70 per cent of the Nifty 50 stocks during the same period. During this period, domestic institutional investors increased their holdings in IT stocks by 120 basis points, in capital goods by 40 basis points and in retail sector companies by 20 basis points.
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