Shareholding and sector weights movements in FIIs and DMFs

13 Nov 2023 , 11:25 AM

Analysts of IIFL Capital Services analyse the FII and Domestic MF shareholdings. They find that promoters have reduced their stake whereas FIIs and DMFs have increased their stakes, and particularly in Mid and Small caps. FIIs continue to below on pvt Banks but there is still a very striking concentration in HDFCB. From 16.2%, HDFCB has come down to 12.7% of FII AUM in 6m, and this trend may continue for the next 2-3 quarters. Cap Goods, surprisingly the max FII uw sector, can benefit. 

FIIs and DMFs increase stake across mcaps; Promoters reduce: 

Analysts of IIFL Capital Services see that over the last year, FIIs and DMFs have increased their overall stake across mcap categories, while promoters have downstaked, and both trends have been more prominent in Mid and Smallcaps. Individual holdings have seen reduction in Midcaps. Overall promoter pledge in NSE500 shares dropped by 0.4ppt YoY/0.2ppt 6m to 2.5% as on Sep 2023.

Increasing focus on SMID: 

At 22.6%, FII stake in Large Caps is significantly higher than in SMID. But FII holdings are still significant in midcaps at 13.8%, and are up by 1.1ppt, compared to a mere 0.4% rise in stake of DMFs who have reached 9.2%. DMFs have similar average stake between 9-10% across MCap categories. Five-Star Business Finance, Dixon, Medplus, Bikaji Foods, Suzlon, Timken and Vedant Fashions are some SMID names that both FIIs and DMFs have bought into in the last 6 months. 

Sectoral Positioning:

Compared to MSCI India IMI Index, FIIs are significantly ow on Pvt Banks (largely due to ow on HDFCB by ~8ppt), resulting in them being uw on most other sectors. In HDFCB, ow wrt MSCI has been coming down in HDFCB, and marginally rising in other major banks (espl ICICI Bank and SBI), and this trend should continue for 2-3 quarters. Compared to NSE500 Index, DMFs are ow on PSU banks, NBFC, Cap Goods and Pharma, while being uw on IT, Pvt Banks, FMCG, Paints and Reliance. FMCG, IT, and Metals & Mining are some sectors where both FIIs and DMFs are uw vs respective indices.