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MOSL:INDIA STRATEGY: Ownership analysis – DII stake in Nifty-500 at a multi-quarter high

• Equity markets have remained volatile in CY22 with Nifty-50 and NSE Midcap-100 declining 4% and 5% YTD'22, respectively.
• Within NSE-500, FII and DII purchases depicted divergent sequential trends. On a QoQ basis, DIIs increased their holdings in all sectors except Insurance, Capital Goods, and Utilities. Conversely, FIIs increased their holdings in only three sectors – Automobiles, Insurance and NBFCs.
• FII outflows in 1QFY23 have been the highest ever at USD15b; however, domestic equity inflows continue to remain robust (DII inflows stood at USD15.2b in 1QFY23).
• In this report, we delve deep into their ownership of various sectors/companies in the Nifty-500 and see how their holdings evolved in 1QFY23.

FII holding in Nifty-500 declines for the sixth consecutive quarter

• FII holding in Nifty-500 was down 50bp QoQ/190bp YoY to 19.8% in 1QFY23. DII holding in Nifty-500, however, was up 70bp QoQ/120bp YoY to 15.2%.
• FIIs reduced their ownership in 57%/78% of Nifty-500/Nifty-50 companies QoQ, while DIIs raised their stake in 59%/80% of Nifty-500/Nifty-50 companies, respectively.
• A mixed trend was observed in promoter holdings, with a marginal increase of 10bp QoQ (flat YoY to 50.1%). Promoter stakes in Escorts Kubota, Poly Medicure, Shriram Transport Finance, Mahindra CIE, CG Power & Industrial, and Shriram City Union Finance increased QoQ. Conversely, stakes in Bata India, MTAR Technologies, Adani Enterprises, and Wockhardt declined QoQ.
• As a proportion of the free-float of Nifty-500, FII ownership decreased 90bp QoQ to 39.7%, while DII ownership increased 140bp QoQ to 30.4%. Notably, FII ownership declined 370bp YoY, whereas DII ownership rose 240bp YoY.
• The FII-DII ownership ratio in the Nifty-500 contracted to 1.3x in 1QFY23 (from 1.5x in 1QFY22).
• Over the last one year, the FII-DII ratio has expanded only in Utilities, but has contracted in Real Estate, Insurance, NBFCs, Private Banks, Retail, Cement, Automobiles, Healthcare, Consumer, Technology, Chemicals, Capital Goods and Telecom.