In the case of another PSU that conducted a stake sale, MOIL, data on FIIs' shareholding during the quarter was not available on the Bombay Stock Exchange. Central transmission utility PowerGrid saw an over seven-fold jump in FII shareholding to 12.05 per cent in the quarter ended December 31, 2010, from 1.65 per cent in the September quarter.

PowerGrid's experience was replicated by Coal India after it made its listing debut in November last year, with the company witnessing a two-third increase in FII shareholding in two months to 5.54 per cent at the end of the December, 2010. As of October 30, the company had a FII shareholding of 3.32 per cent.

Analysts attributed the trend of increased FII holdings in PSUs to the strong balance sheet and long-term prospects of these entities. "PSUs are generally known for their strong balance sheet, even enjoy virtual monopoly in some of the sector and they have got government blessing. These are some of the reasons which make FIIs comfortable in investing in such entities," SMC Global Equity Head Jagannadham Thunuguntla said.

He further said most of the PSUs come out a lower price band for their initial stake sales than private sector companies. Similarly, NTPC saw its FII shareholding climb to 3.36 per cent in the quarter ended December from 2.85 per cent in the September quarter. FIIs' shareholding in Shipping Corp rose to 2.32 per cent in the quarter under review from 1.98 per cent in the September quarter.

Interestingly, FII's stake in Rural Electrification Corporation (REC), is far more than in other PSUs, although the increase is not much. The company saw its FII shareholding inch up to 21.22 per cent in the December quarter from 20.4 per cent in the previous quarter.

Despite the government's larger holding in these companies, their operations are based on sound business practices, so the chances of facing corporate governance issues are very less, which is also one of the primary reasons for the increasing FII holdings, CNI Research CMD Kishor Ostwal said.

Iron ore producer NMDC and hydro power firms NHPC and SJVN Ltd also witnessed an increase in FII shareholdings in the October-December quarter of 2010 vis-a-vis the quarter ended September.

On the other hand, EIL saw a marginal decline in FII shareholding to 6.83 per cent in the December quarter from 6.98 per cent in the previous quarter, while Oil India saw FII's stake decline to 1.56 per cent in the quarter under review from 1.73 per cent in the September quarter.

Apart from companies that have already come out with their initial share sale, ONGC and IOC -- which are slated to come out with two big-ticket FPOs in 2011, have also witnessed an increase in FII shareholding.