The ownership of foreign portfolio investors in the NSE-listed companies dropped for the fifth consecutive quarter to a 12-year low of 17.6%, according to the India Ownership Tracker for the first quarter of the current financial year. However, the share of domestic mutual funds rose to a record high of 9.2%, aided by sustained SIP inflows.
Funds Shifting From Foreign Investors To Domestic MFs
An analysis of the Nifty 500 revealed that FPI ownership continued to taper, falling 24 basis points quarter-on-quarter to 18.7%. The same fell by 28 basis points sequentially to 17.6% for the NSE-listed companies.
This is the fifth drop in a row, corroborating with strong foreign capital outflows in the first two months of the quarter. The FPI ownership in the Nifty 50 companies, however, inched up by a modest 15 bps compared to the to 24.5%.
Talking about the domestic mutual funds' share, it rose to a fresh all-time high of 11.1%, 9.6% and 9.2% in the Nifty 50, Nifty 500 and NSE-listed companies respectively. The DMFs injected a net amount of Rs 1.3 lakh crore into Indian equities in the June quarter.
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Sectoral Bets
Foreign Portfolio Investors
The analysis indicates that the foreign portfolio investors like the financial space, especially the larger companies in the sector. They also turned incrementally positive on communication services, reflecting the impact of recent tariff hikes. This came at the expense of a deepened negative stance on industrials, materials and consumer staples, indicating a cautious view of foreign portfolio investors on India's consumption outlook.
Among other sectors, they turned mildly negative on information technology and healthcare, while remaining neutral on energy and consumer discretionary sectors.
Domestic Mutual Funds
The preference is similar for domestic mutual funds as they are overweight on financials and have reduced their weightage on consumer staples and materials.
Among other sectors, domestic mutual funds maintained their trimmed-yet-overweight stance on healthcare and consumer discretionary within the Nifty 500 companies, and a neutral stance on industrials, information technology and communication services.
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The total promoter ownership in the Nifty 500 and NSE-listed companies rose for the fifth quarter in a row by 14 bps QoQ each to a seven-quarter high of 50.9% and 51.5% respectively in the quarter ending June 2024.
This was primarily led by an increase in government and foreign promoter share, partly offset by a decline in private Indian promoter ownership for the second and fourth quarter in row respectively.
Promoter ownership in the Nifty 50 companies, however, declined by a steep 54 bps QoQ to 42.3% in the June quarter, marking the first drop in six quarters.
After seeing a modest drop in the previous two quarters, individual investors' share of the total NSE-listed universe inched up by 10 bps QoQ to 9.6% at the end of the June quarter. This was supported by robust net investments by individual investors in the last couple of quarters. All sectors, barring materials and consumer staples, saw the ownership of individual investors increase or remain broadly steady in the June quarter.
Adding indirect holding via mutual funds and direct holding as promoters to this, individuals' share in equity markets is now only 20 bps away of that of the FPIs. This gap was as high as 7.1% in fiscal 2021, indicating the growing role and significance of individual investors in the Indian equity markets.
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