Strategy: Shareholding and sector weights movements

27 Feb 2024 , 11:33 AM

Analysts of IIFL Capital Services analyse FII and Domestic MF shareholdings. They find that promoters have reduced stake, while FIIs and MFs have increased, and particularly in SMID, during CY23. FIIs continue to be O/W on Pvt. Banks but there is still a very striking concentration in HDFCB. FIIs continue to prefer large caps over SMID, while MFs are broadly equal across the board. 

FIIs and MFs increase stake across Mcaps; Promoters reduce: 

With FIIs and MFs each pouring in $21bn net in Indian equities during CY23, they have increased their overall stake across Mcap categories, while promoters have downstaked, and both the trends have been more prominent in Mid and Smallcaps. The value of FII holdings in NSE500 is now ~$770bn. Individual holdings have seen reduction in midcaps. Overall promoter pledge in NSE500 shares dropped by 0.7ppt YoY/0.5ppt QoQ to 2%, as on Dec 2023.

Trends in FII & MF holdings: 

At 22.4%, FII stake in Large Caps is significantly higher than that in SMID. MFs have similar average stake between 9-10% across MCap categories. Both FIIs and MFs picked up 1.1ppt stake in Midcaps during CY23, while Smallcaps saw higher stake increase by MFs. ABB, KEI Industries, Tata Motors, PB Fintech and CAMS are some names that saw FII buying in every quarter, while Biocon, Voltas, Quess Corp, Sobha and Page Industries saw consistent selling. MFs have been continuously buying ACC, Zomato, Kaynes, Nykaa and Metropolis; while selling ABB, BOB, M&M, BEL, and SBI. 

Sectoral positioning:

Compared to MSCI India IMI Index, FIIs are significantly ow on Pvt Banks (largely due to being ow on HDFCB by ~8ppt), resulting in them being uw on most other sectors. Compared to NSE500 Index, MFs are ow on PSU banks, NBFC, Cap Goods and Pharma, while being uw on IT, Pvt Banks, FMCG and Reliance. FMCG, IT, Paints and Metals & Mining are some sectors where both FIIs and DMFs are uw vs the respective indices. Analysts of IIFL Capital Services think Metals is getting interesting, given that commodity prices are at a trough. QoQ, sector positioning has broadly remained stable.