FIIs turn attention to mid-, small-cap stocks

Foreign institutional investors are increasingly looking at mid-cap and small-cap ideas.

Mr Richard C. Kang, CIO of Emerging Global Shares, a company that constructs exchange traded funds on the Dow Jones, said: “Mid-cap and small-cap stocks that cater to India’s domestic consumption are among the best bets going forward.”

Mid-cap stocks have seen an increase in foreign institutional investors’ stakes in the first quarter of FY-11; 145 out of the 267 mid-cap stocks that are part of BSE Midcap index saw an increase in their holding, while 113 saw foreign investors exiting.

Favourites

Some of the counters that witnessed increase in FIIs holding include Dewan Housing, Kalpataru Power, Hindustan National Glass, Infotech Enterprises and Shree Renuka Sugars. Among others, GTL, Indiabulls Real Estate, India Infoline, Aban Offshore and Indiabulls Financial saw biggest drop.

In the BSE small-cap index, 184 stocks saw anincrease in FII holding and a similar number witnessed exit by FIIs.

The FII stakes in 142 small-cap companies remained unchanged.

Foreign fund inflows have reached Rs 50,276 crore or about $11 billion so far this year.

The BSE Sensex climbed 4.6 per cent this year while the BSE Midcap jumped 12 per cent and the BSE Small-cap soared 13.86 per cent. The BSE-500 index moved up by 7 per cent.

“We have invested in Amtek India, UCO Bank, Indian Bank, Patni Computers and Dish TV in our portfolio that caters to the India Small Cap ETF that was launched a fortnight ago on NYSE,” said Mr Richard C. Kang.

Amtek is a case of increasing capacity utilisation and has one of the best debt equity ratios of 0.48 in the auto components business, said an auto analyst with a leading mutual fund.

The auto components business is expected to see a capex of Rs 13,000 crore in FY-11and a growth of 15-16 per cent in FY-11 and 17-18 per cent in FY-12, according to a Crisil estimate.

UCO Bank

UCO Bank is expected to grow due to higher net interest margins, overall business growth and an attractive valuation at a price-to-adjusted-book value of 1.6, said Mr Alok B. Agarwal, Head of Research at Mata Securities.

Source: http://www.thehindubusinessline.com/2010/08/05/stories/2010080553081000.htm

 

FIIs, MFs hike stakes in over 100 cos in Q1

Foreign institutional investors and domestic mutual funds hiked stakes in over 100 different companies in the April-June quarter,CMIE data for nearly 250 companies out of the S&P CNX 500 shows. The stake of FIIs went up in 116 companies while mutual funds increased their holdings in 125 companies in the three-month period which saw the S&P CNX 500 go up by 43%. 

The S&P CNX 500 is the country’s first broadbased benchmark and represents about 95% of total market capitalisation. In comparison, only 38 promoters saw value in their stocks by hiking stake, while 196 promoters maintained holdings at the same level as they were at the end of March. 

The change in strategies was evident as FIIs which lowered stakes in nearly 100 companies shifted away from midcaps and smallcaps in sectors such as real estate, media, FMCG, hospitality, pharma and smaller banks besides others. 

Sectors which saw FII ramping up stakes were auto, finance, hospitals, telecom but most companies fell into largecap category boasting of market cap above Rs 10,000 crore. 

Mutual funds displayed different traits boosting stakes in real estate, shipping and power companies, but reducing exposure to banks, metals, pharma and infra-led themes like metals and cement.
“Valuations have not reached an untenable level even now. Mutual funds are sitting on same cash and inflows into equity funds through new fund offers as well as existing schemes will trickle into equity markets very soon. Some concerns exist on valuations but they are specific to certain select companies,’’ said David Pezarkar, head of Equities at Shinsei Asset Management.

Source: http://economictimes.indiatimes.com/FIIs-MFs-hike-stakes-in-over-100-cos-in-Q1/articleshow/4814142.cms

 

Sebi wants to make P-Notes route less attractive

Sebi may take a decision this week.

To discourage foreign investors from the participatory notes (PN) route, the Securities and Exchange Board of India (Sebi) will on Thursday decide on a proposal to lower the registration fees for foreign institutional investors (FIIs).
The regulator is expected to recommend amendments to the Sebi Act and the Securities and Contract Regulation Act to arm itself with more powers to deal with fraudsters. The amendments under discussion include powers to attach the assets of those found guilty of market manipulation, sources said. The move comes soon after the Satyam scam, when Sebi had to play second fiddle to local police and investigators.

In addition, the Sebi board is scheduled to discuss a host of other measures aimed at speeding the rights issue process and lowering the cost of investing in mutual funds.
According to sources privy to the discussions, Sebi has proposed that the registration fee for FIIs be cut to $5,000 (Rs 2.35 lakh) for a five-year licence, as against the present level of $10,000 (Rs 4.70 lakh) for a three years. Similarly, in case of sub-accounts, the registration fee is expected to be lowered to $1,000 (Rs 47,000) for five years from $2,000 (Rs 94,000) for three years, said informed sources.
Market participants said over the past month, when $3.5 billion (around Rs 16,500 crore) of foreign funds flowed into Indian capital markets, a large chunk came through the PN route. Sebi wanted more funds to be invested directly by FIIs and so, has proposed a cut in the registration fees, the sources said.
There is possibility of more such funds waiting to come through the FII route. The Cayman Islands Monitory Authority (CIMA), where over 3,000 hedge funds and FIIs are registered, has now become a member of the International Organization of Securities Commissions (IOSCO). The Cayman Islands have been famous as a tax-avoidance and regulation-avoidance haven.
“This is a good development, as all the hedge funds registered with CIMA can also be registered by Sebi. This move can bring in huge investment through FII route,” said Siddharth Shah, head funds practices, Nishith Desai Associates.
In the case of rights issue, the market regulator will discuss a proposal to further simplify the procedure, to help complete the issues faster. It is expected to lower the disclosure requirements related to promoter holding, capital structure, financial details, and summary of industry and business, sources said.
An interesting proposal is the introduction of variable entry loads for mutual fund investors. Sebi has earlier proposed an option for mutual fund investors to issue separate cheques for payment of commission to distributors and for investment. Alternatively, application forms will have a column where investors will mention commission payable to the distributor, which the fund house will deduct and pay.

Source: http://www.business-standard.com/india/news/sebi-wants-to-make-p-notes-route-less-attractive/361322/

 

FIIs pump in Rs 3,500 cr through 62 bulk deals in April, May

With FIIs getting back the voracious appetite for Indian stocks, they have put in over Rs 3,500 crore through just 62 bulk deals on the Bombay Stock Exchange in the first two months of the current financial year.

According to an analysis of bulk deals on the exchange in April and May this year, Foreign Institutional investors’ (FII) transacted as many as 62 bulk deals buying shares worth Rs 3,516.61 crore, with the biggest deal being the sale of over five per cent stake in DLF for Rs 2,106 crore.
Three foreign institutional investors — Deutsche Securities Mauritius, Euro Pacific Growth Fund and Copthall Mauritius Investment — invested as much as Rs 2,106.1 crore in DLF for buying 9.15 crore shares representing 5.39 per cent stake in the realty firm last month.
A bulk deal refers to a transaction which involves buying or selling of more than 0.5 per cent of the number of equity shares of any listed company.
Other key bulk deals in the period include those of private sector lender HDFC and commercial vehicle maker Eicher Motors.
FIIs have turned positive from the starting of the current fiscal year, pouring in Rs 6,500 crore in April and Rs 20,117 crore ($4.1 billion) in the month of May, making the total of $4.2 billion (around Rs 20,473 crore) to date.
Other FII’s which invested in the stocks include Goldman Sachs Investment Mauritius, Sansar Capital Mauritius and Deutsche Securities Mauritius.
The stocks which saw buying from the FIIs are Eicher Motors, Vijay Mallya-led United Breweries, HDFC, Aban Offshore, Adlabs Films, Merk, HDFC Bank.
Meanwhile, according to a recent research report, domestic mutual funds are shying away from bulk deals involving large chunks of shares while investing in equity markets as they prefer to retain the confidentiality of transactions.
According to data compiled by SMC Capitals, during the period from 2006 to April 2009, the volume traded on the bulk deal counter of the stock exchanges stood at Rs 5,00,500 crore, but the mutual funds accounted for just three per cent of the total transactions.

Source: http://www.business-standard.com/india/news/fiis-pump-in-rs-3500-cr-through-62-bulk-deals-in-april-may/63401/on

 

FIIs pump Rs 20,000 cr in stocks from early-March

Foreigners have been able to spot value better than Indians, at least as far as the stock market goes. FIIs have put in close to Rs 20,000 crore into Indian stock markets in the last 43 days since the bull rally began. Simply put, FIIs were daily net buyers of Rs 500 crore investments per day at a time the benchmark index went up above 14,000 from 8,160 levels. In comparison, mutual funds have been net buyers of Rs 3,300 crore – around 1/7th of the amount committed by FIIs.
According to Sebi data, FIIs have made net investments of Rs 19,820 crore till Tuesday from March 9, (when the 6,000-point rally began). The deluge of funds brought into the country by the FIIs has made them net buyers of equity for the calendar year 2009 at Rs 10,681 crore. They were net sellers of stocks amounting to a whopping Rs 52,987 crore in calendar year 2008.
FIIs are betting on companies reporting an improved financial performance in the years to come on the back of solid government policy initiatives. “We think the ensuing policy action will improve growth and thus earnings. We are forecasting 2.5% and 12.5% growth in earnings for sensex constituents in FY2010 and FY2011 respectively compared to our earlier forecast of minus 10% and 11%,” Ridham Desai of Morgan Stanley said.
While many investors are waking up the possibility of Indian economy coming back on track with a smoother-than expected government formation, experts say the bet taken by FIIs for the last 2 months has paid off.
In the last one month, foreign investors have also aggressively taken up stakes in cash-strapped real estate companies such as DLF, Unitech, Indiabulls Real Estate as well as Suzlon either through qualified institutional placements or direct buying on the stock exchanges from the promoters. This has helped FIIs who actively participated in such offerings to immediately sit on significant gains (notional).
Deals like DLF promoters selling off 16.8 crore shares at Rs 230 apiece (current price Rs 385), Indiabulls Real Estate just sold off 15 crore shares at Rs 185 (current price Rs 200) and Unitech sold off 42 crore shares at Rs 38.50 apiece (current price Rs 71) show how foreign investors profited.
A re-rating of the markets is likely to take markets to expensive territory relative to current earnings but an improving fiscal situation would improve the optimism regarding growth next year, Jyotivardhan Jaipuria of Bank of America Merrill Lynch said.
However, cautious mutual funds have stuck to debt as their choice of asset during the same period – taking a diametrically opposite view. While FIIs were net sellers of debt to the tune of Rs 3,500 crore from March 9 – fund majors were net buyers having put Rs 46,000 crore into debt during the same time.

Source: http://timesofindia.indiatimes.com/Business/India-Business/FIIs-pump-Rs-20000-cr-in-stocks-from-early-March/articleshow/4553516.cms

 

FIIs diverting their investments to emerging economies

Having sold Indian shares worth close to Rs 5 trillion since beginning of this year, the overseas investors seem to be ploughing back the money to the bond market in India and abroad as well as equities in other emerging economies such as in Latin America.

After a sharp rally for the past few years, the Indian stock market has been under an intense bear grip since January this year, which has seen the total value of all listed stocks here plunging by more than a third or over Rs 25,00,000 crore.

Out of this, FIIs are estimated to have incurred a loss of close to Rs 3,00,000 crore, which is also equivalent to nearly one-third of their total holdings before the downslide began on the bourses.

FIIs are estimated to have sold shares worth more than Rs 4,70,000 crore so far in 2008. While the overseas investors have also purchased shares worth about Rs 4,40,000 crore in this period, on a net basis, they have pulled out investment worth over Rs 25,000 crore (over $6.5 billion).

In the wake of continuing negative global cues such as rising crude prices, bearish phase in international markets and domestic concerns like soaring inflation and moderating economic growth, the analysts expect FIIs to continue to remain net sellers in Indian equity market in coming months.

Although the experts are divided on where FIIs are diverting their investments, some believe they are getting attracted to equities in Latin America and bonds in the US.

“The FIIs are mostly covering their losses and investing in Latin American markets. With the currency appreciation and higher interest rate differentials, Latin America is increasingly becoming attractive for the foreign investors,” leading rating agency Crisil’s Principal Economist D K Joshi said.

Some analysts also believe that the overseas funds going back to their local markets.

“The FIIs are placing their bets safe. They are taking the funds back and investing in the US bond market. They are mostly booking profit and recovering losses,” PriceWaterHouseCooper Executive Director Sanjay Hegde said.

Even in India, while FIIs have been net sellers in the equity, they have been mostly buyers in the bonds with a net investment of more than Rs 2,000 crore (over 500 million dollars) so far in 2008.

Economists feel an immediate reversal in FIIs’ stance towards Indian equities is not expected soon because of the prevailing uncertainties in the crude market and the country’s political scenario.

“With the crude predicted to touch 175 dollars a barrel and the Indian currency depreciation, FIIs will turn their focus to the commodity market which has emerged as an alternate asset class. They would prefer to stay invested in the commodity market and hedge against inflation,” Crisil’s Joshi said.

The analysts feel that a bounce back could be seen around December with the soaring oil prices likely to cool down by that time.

“With the reduced risk appetite of the FIIs and the Indian growth moderation, the foreign investors are likely to turn their focus back to India towards the end of 2008 when the political and crude related uncertainties are expected to tame down,” Joshi added.

 

The FIIs On Tuesday – July 2, 2008

The FIIs on Tuesday stood as net seller in equity and net buyer in debt. The gross equity purchased was Rs2,865.00 Crore and the gross debt purchased was Rs171.70 Crore while the gross equity sold stood at Rs3,092.20 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was (Rs227.20) Crore and net debt was 171.70 Crore.

 

The FIIs on Monday – June 1, 2008

The FIIs on Monday stood as net seller in equity and debt. The gross equity purchased was Rs3,348.60 Crore and the gross debt purchased was Rs105.00 Crore while the gross equity sold stood at Rs4,094.70 Crore and gross debt sold stood at Rs366.70 Crore. Therefore, the net investment of equity reported was (Rs746.20) Crore and net debt was (Rs261.70) Crore.

 

FII Activity on 27-06-2008 – June 30, 2008

The FIIs on Friday stood as net seller in equity and debt. The gross equity purchased was Rs4,235.50 Crore and the gross debt purchased was Rs207.70 Crore while the gross equity sold stood at Rs4,704.60 Crore and gross debt sold stood at Rs483.50 Crore. Therefore, the net investment of equity reported was (Rs49.00) Crore and net debt was (275.90) Crore

 

FIIs On Thursday – June 27, 2008

The FIIs on Thursday stood as net seller in equity. The gross equity purchased was Rs2,901.60 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,005.20 Crore and gross debt sold stood at Rs187.40 Crore. Therefore, the net investment of equity reported was (Rs103.60) Crore and net debt was 0.00 Crore.