The latest listed companies’ ownership data shows that FIIs’ holding has gone down further to 17.6%, a decline of 100 bp from the previous quarter. Effectively, their holding of equities reduced by over 3 p.p. in 2008 – with net outflows amounting to US$14 bn. Domestic institutions’ ownership rose by 50 bp during the period.
Institutional investors continue to hold more than a quarter of their portfolio in banks. All different types of institutions have the sector as their largest overweight versus respective benchmarks. We feel that the sector is extremely vulnerable to a large-scale sell-off if asset quality concerns rise.
Relative reduction in industrials continues particularly for domestic MFs. The relative beneficiaries are defensives such as staples, healthcare and IT services