FIIs cut stake in many large cap stocks in Q2. Find out more

India’s benchmark stock market indices have been consolidating near record highs over the past month and many investors have become cautious as they anticipate a correction from these levels. Indeed, foreign institutional investors (FIIs) have been net sellers in Indian equities in the current financial year to the tune of Rs 11,167 crore.

No wonder, then, that FIIs have been putting more money into large cap-stocks instead of betting on the riskier mid- and small-cap stocks over the past few months.

Quarterly shareholding data shows FIIs pushed up their stake in as many as 89 listed companies that have a valuation of $1 billion (Rs 7,500 crore) or more during the second quarter of this fiscal year. However, at the same time, they snipped their stake in as many as 87 firms with a valuation of at least $1 billion.

Also, FIIs cut stake in around four dozen large caps, or companies that currently have a market capitalisation of Rs 20,000 crore or more, during the July-September period.

Top large caps that saw FII selling

LIC Housing Finance saw the most distinct dilution of offshore investors’ stake. However, this was largely due to a preferential allotment to state-run Life Insurance Corp (LIC) that shrunk the shareholding of public investors.

However, FIIs also sold shares in LIC Housing Finance last quarter and brought down their aggregate holding from 145.3 million shares to 132.4 million shares. As a result, their combined stake fell from 28.8% to 24.07% last quarter.

The mortgage financier counted as many as 325 FII shareholders as of June 30. This number fell to 272 by September 30, stock-exchange data show.

Shriram Transport Finance, Sona BLW Precision, Lupin, SBI Life Insurance, Prestige Estates, UPL, Hero MotoCorp, Adani Green Energy, YES Bank, ICICI Lombard General Insurance, Aurobindo Pharma, Indraprastha Gas were among the large caps that reported a stake dilution of 2% or more by FIIs in the second quarter.

The offshore investors also turned bearish on top private banks and drugmakers, non-banking finance companies, Adani Group stocks, a few top-tier IT counters, steel producers and automakers.

These included HDFC Bank, ICICI Bank, HCL Technologies, Bajaj Finserv, ITC, Axis Bank, Adani Enterprises, Tata Motors, JSW Steel, Tech Mahindra, Vedanta, Bajaj Auto and Mahindra & Mahindra.

Other companies that saw an FII selloff during July-September were Godrej Consumer, BPCL, Britannia, Ambuja Cements, InterGlobe Aviation, IndusInd Bank, Dr. Reddy’s Labs, Muthoot Finance, Apollo Hospitals, Cholamandalam Investment, Bandhan Bank, Ashok Leyland, JSPL, Lupin, Oracle Financial, Oberoi Realty, Tata Communications, Dixon Technologies, Tube Investments, Deepak Nitrite, Torrent Power, Indian Bank and L&T Finance Holdings.

Several of these stocks also figured in the FII sell basket in the previous quarter. These included Tech Mahindra, commodities major Vedanta, automobile firms Hero MotoCorp and Mahindra & Mahindra, and BFSI stocks Shriram Transport Finance, SBI Life Insurance and YES Bank.