DII holdings in BSE 100 companies rise to 25-quarter high in Q1
Market data showed that at the end of June, domestic institutions held 14.22% stake in 93 companies comprising BSE 100 index. Share of DIIs in these same companies were at 13.52% in corresponding quarter last fiscal.
A massive liquidity surge in mutual funds and insurance companies has pushed the combined shareholding of domestic institutional investors (DIIs) in India’s largest listed companies to the highest in last 25- quarters during the April- June period.
Market data showed that at the end of June, domestic institutions held 14.22% stake in 93 companies comprising BSE 100 index. Share of DIIs in these same companies were at 13.52% in corresponding quarter last fiscal. BSE 100 accounts for 70.40% to the aggregate India’s market capitalization. Traditionally, the BSE 100 companies have accounted for close to 70% of total fund allocation by DIIs.
In the three months, DIIs had collectively pumped in ₹12992.62 crore in Indian shares despite volatility in stock markets due to economic concerns driven by two months of strict nationwide lockdown following covid-19 outbreak. Stringent lockdown measures imposed in March-end brought business activities to a sudden halt, but as India unlocked gradually there was a fast normalisation of activity and most market participants expected the economy to revive quickly on pent-up demand.
Analysts said fund managers mostly bet on the believe that ‘Indian fundamentals are well placed and hence it remains a long-term growth story’ which led to massive shift of funds from assets like real estate or bank deposits to equities.
On 12 May, Prime Minister Narendra Modi announced a special economic package worth ₹20 trillion, corresponding to roughly 10% of India’s FY21 gross domestic product (GDP), much higher than market expectations. “Government’s response to the economic crisis instilled confidence in institutional investors to remain bullish on Indian markets. Also after the steep market corrections in March, many companies were available cheap which led to further buying by DIIs,” said an analyst refusing to be named.
However, equity mutual funds schemes inflow crashed 95.75% from ₹5,666.34 crore in May to ₹240.55 crore in June, the lowest since March 2016, Association of Mutual Funds in India (AMFI) data showed. Also, inflows through systematic investment plans (SIP) fell below ₹8,000 crore for first time since November 2018, touching ₹7,927.11 crore, June. Most analysts had attributed it to profit-booking by investors, due to surge in the markets post March lows. “Future equity flows to a large extent will depend on how soon the confidence on future cash flows for individuals returns back to normal,” said Arun Kumar, head of research at FundsIndia.com said.
Companies which have seen increase by DIIs in June quarter are Crompton Greaves Consumer Electrical Ltd, Tata Consumer Products Ltd, Piramal Enterprises Ltd, Page Industries Ltd and Hindustan Petroleum Corporation Ltd among companies in BSE 100 index.
Meanwhile, shareholding of foreign institutional investors into the 93 companies was reduced to 22.74% in June quarter from 23.50% in same quarter last fiscal. In June quarter, FIIs had invested $3.65 billion into Indian shares. Companies where FIIs increased their stake most in April-June are Zee Entertainment Enterprises Ltd, HDFC Life Insurance Company Ltd, RBL Bank Ltd, Shriram Transport Finance Company Ltd and SBI Life Insurance Company Ltd.
In June quarter, BSE 100 index had risen 20.09% outpacing benchmark Sensex and Nifty which were up 18-19% in the period.