Foreign funds took a shine to Indian Sensex companies in the third quarter and increased their exposure to 17 blue-chip firms, including Tata Motors and ITC, which analysts have primarily attributed to attractive valuations.
According to an analysis of the 30-Sensex firms, 17 companies witnessed an increase in foreign institutional investors (FIIs) holdings, but the foreign funds also reduced their stake in 13 stocks during the October-December quarter of the current fiscal in comparison to the preceding (July-September) quarter.
FIIs had scaled down their ownership in 19 Sensex companies during the September quarter this fiscal, while overseas investors had consolidated their stakes in 16 Sensex firms during the June quarter.
Market analyst attributed the increase in FII shareholding in blue-chip firms to attractive pricing and reduced opportunities at the global level.
"Global opportunities are reducing so FIIs are shifting toward these companies," SMC Global Securities Research Head Jagannadham Thunuguntla said.
Another analyst, Destimoney Securities MD and CEO Sudip Bandyopadhyay said, "FIIs are flocking toward many Sensex companies because these stocks are available at a very attractive price."
Auto giant Tata Motors' FII holdings increased the most during the quarter under review, rising by 2.26 percentage points to 24.14 per cent, while FMCG firm ITC also witnessed a substantial 1.05 percentage points increase in FII holdings to 16.31 per cent.
In contrast, overseas investors reduced their exposure to private sector lender ICICI Bank by 3.43 percentage points to 34.74 per cent and by 2.1 percentage points in the engineering firm Larsen & Toubro to 13.84 per cent.
Metal companies such as Hindalco Industries, Tata Steel, Sterlite Industries and Jindal Steel & Power Ltd (JSPL) also witnessed a reduction in FII holdings. FIIs reduced their holdings in the country's most-valued firm Reliance Industries by a marginal 0.29 percentage points to 17.03 per cent in the third quarter of the current fiscal.
Meanwhile, the barometer index Sensex crashed by 998.84 points, or 6.07 per cent, in the third quarter to close at 15,454.92 at the end of December.
Mirroring the volatility in the global economy, FIIs were not very consistent while investing in the Indian market during the third quarter. In October, they pulled out Rs 158.3 crore from the equity market, but they infused Rs 1,677.4 crore in November and Rs 98 crore in December, according to the data available with stock market regulator Sebi.
The other blue-chips in which FIIs have upped their stake are Infosys (0.7 percentage points), HDFC Bank (0.37 percentage points), HDFC (0.79 percentage points), TCS (0.6 percentage points), Bharti Airtel (0.38 percentage points), ONGC (0.12 percentage points) and HUL (0.98 percentage points).
In addition, FIIs consolidated their stakes in NTPC (0.23 percentage points), Wipro (0.66 percentage points), GAIL (0.05 percentage points), Tata Power (0.03 percentage points), Maruti (0.11 percentage points), DLF (0.4 percentage points), Bajaj Auto (0.14 percentage points) and Sun Pharma (0.35 percentage points).
On the other hand, FIIs reduced their holdings in Tata Steel by 1.74 percentage points, in Hindalco Industries by 1.71 percentage points, in Sterlite Industries by 0.75 percentage points and in JSPL by 0.58 percentage points.
In addition, foreign fund houses' ownership has fallen in state-run firms BHEL, SBI and Coal India, drug-maker Cipla and auto companies HeroMoto Corp and Mahindra & Mahindra.
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