As foreign institutional investors (FIIs) put in record inflows into the Indian markets in the latest quarter, where did the money end up?
A peek at the FII holdings at the end of September 2010 declared by 49 companies on the BSE 500 index list revels that banking and financial service institutions including the State Bank of India and HDFC Bank are among leading beneficiaries of FII money. A surprise gainer was supply chain management firm Redington India whose FII stakes rose 10.8 percentage points from 19.1 per cent to 29.9 per cent over the quarter.
“When you are betting on a macro story like a GDP story, banking is always the way to play it,” said Aseem Dhru, CEO, HDFC Securities. “Also across the industry, banking has had a predictable earnings growth unlike other sectors.”
In the July-September period, FIIs pumped in R53,283 crore in the Indian equity market out of which R43,072 crore went to the secondary market.
Apart from SBI and HDFC Bank, Andhra Bank, LIC Housing Finance also saw a sharp rise in FII stakes.
While the FIIs raised their stake to 41.7 per cent in LIC Housing Finance at the end of September 2010 from the 32.1 per cent they held in June 2010, they also raised their holding in State Bank of India by 2.5 percentage points from 11.5 per cent in June 2010 to 14 per cent.
HDFC Bank’s FII holdings move up by 2.3 percentage points to 29.72 per cent in September 2010 over the same period.
The FII power clearly boosted stocks.
SBI witnessed a gain in its share price by 43 per cent in the quarter and LIC Housing Finance and HDFC Bank saw their share prices rise by 47 and 30 per cent respectively, while the Sensex gained only 6.5 per cent during the period.
The pharma sector has also emerged as a favourite for the FIIs. Aurobindo Pharma, Glenmark and Lupin Lab are among key gainers.