Mid caps that attracted FIIs

Nifty and Sensex hit all-time highs this week. The rally has seen major participation from Foreign Institutional Investors (FIIs). FIIs fuelled a select group of mid-caps after their correction in the second half of 2018.

The rally was majorly backed by mid-caps. As soon as markets saw panic selling, valuations of mid-cap stocks became fair. Making full use of this opportunity, FIIs increased their stake in select stocks such as Sunteck Realty, JSW Holdings Ltd., Shankara Building Products Ltd., Mahanagar Gas Ltd, Newgen Software. The rise in stake in these stocks was, in some cases, more than 5 per cent to 10 per cent in the year 2018.

India’s leading natural gas distribution company Mahanagar Gas had 9.44 per cent FII holding at the end of December 2017. This rose to as high as 21.61 per cent at the end of 2018.

Business automation software provider Newgen Software had zero FII exposure, but their holding increased to 11.63 per cent in December 2018. FII activity can be considered the main reason behind the strong performance of the stock price in September 2018 market correction. In fact, the stock price has shown a surge of 53 per cent since its October 2018 lows of Rs. 220 to touch a high of Rs. 337. Among those companies which saw a fresh entry of FII over 2018 also includes Confidence Petroleum India Ltd., Aster DM Healthcare Ltd, HG Infra Engineering Ltd, which had FII stake at 5 per cent, 4.69 per cent and 1.73 per cent, respectively at the end of December 2018.

The interest of institutional investors will come as a relief after sharp fall in mid-cap stocks. Though domestic institutions have taken a back seat, FII seems to be making full use of low valuations here.