Institutional flows are keenly tracked by market analysts. An analysis of institutional flows by ICICI Securities gives interesting insights. Foreign Portfolio Investors (FPI) reduced their holding in 31 Nifty stocks in Q4FY15-16 as compared to the third quarter. The CNX Nifty consists of a total of 50 stocks classified into 13 sectors. Their holding in Nifty stocks declined by 10 basis points to 28.8% in Q4FY15-16 vis-a-vis Q3FY15-16. The report further stated that during the quarter, FPIs sold pharma, auto, public sector banks, telecom, staples, infrastructure and NBFCs (non banking finance companies). The sectors that FPI's bought were Information Technology (IT), energy, cement and metals. In terms of individual companies, their top buys during the quarter were Reliance Industries, Infosys, NTPC, Eicher Motors and Ultratech Cement. Tata Motors, Maruti, State Bank of India (SBI), Dr Reddy's and Lupin were the stocks in their top 'sell' list.
Coming to flows for the entire financial year, FPI's had net inflows in utilities, metals and energy sectors during FY15-16. They were net sellers in pharma and auto sectors, and public sector banks. Around 30% of the FPI holdings are concentrated in just five stocks – HDFC, Infosys, HDFC Bank, Tata Consultancy Services and Reliance. Around 34% of FPI holding is in 'Financials and Banking' sector. Private banks constitute around 21% of their portfolio.
As per the report, FPIs had 73% holding in BSE 100 companies (excluding banks and financials) with return on equity (RoE) greater than 15% on 31 March 2016. Around 80% of FPI holding was in companies showing positive free cash flows.
Domestic Institutional Investors (DII) were net buyers in the Q4FY15-16 to the tune of USD 1.5 billion as per ICICI Securities. DII holding in Nifty stocks stood at 13.2% on 31 March 2016, which is the same level of the previous quarter. However, DII holding in Nifty stocks significatly increased by 100 basis points from 12.2% on 31 March 2015.
The report states that DIIs sold energy, metals, IT and cement sectors in Q4FY15-16, while all other sectors witnessed buying. Utilities was the only sector which witnessed buying by both FII's and DII's. DIIs top buys during the quarter were NTPC, Bharti Airtel, Tata Motors, Cipla and HDFC. Their top sells were Reliance, Eicher Motors, Sun Pharma, Indian Oil Corporation and Hero Motocorp.
ITC, Larsen & Toubro, Infosys, Reliance Industries and State Bank of India (SBI) are the five stocks which constitute around 30% of DII portfolio. As much as 22% of DII holding is in 'Financials and Banking' sector, while private banks constitute around 13% of their total portfolio. DII holding in companies with return on equity (RoE) greater than 15% stood at around 61%. Some 71% of DII holding was in companies with positive free cash flows.