Contrasting move by FIIs and DIIs

After witnessing one of the sharpest falls in the equity market in the first quarter of CY20, currently, we are going through an unexpected sharp upmove. The equity market is full of uncertainty. Fiscal and monetary sops given by the government and central bank globally have triggered this rally. Indian market is once again dancing to the tune of inflows from foreign investors. FIIs have pumped in the back about two-fifth of what they sold in the entire month of March 2020. In March 2020, FIIs had sold domestic shares worth of Rs 58,600 crore.

The relentless selling by FIIs in the last quarter of FY20 has led to their ownership when Nifty 500 hit a five-year low. They reduced their stake by 80 bps on a yearly basis and stood at 21 per cent at the end of Q4FY20. In terms of companies, they have reduced their stake in more than 300 stocks forming a part of Nifty 500.

Against this, domestic institutional investor including mutual funds has increased their holding in Nifty 500. It was up by 0.9 per cent on a yearly basis and was at 14.8 per cent at the end of Q4FY20. Again in terms of companies, DIIs increased their stake in almost 300 companies on a yearly basis. Among Nifty 50, they increased their share in 39 companies.   

Despite an increase in stake, the ownership of FII as a proportion of free float of Nifty 500 at 42.3 per cent is higher, as compared to DIIs ownership. Meanwhile, the ownership of DIIs stood at 29.8 per cent at the end of Q4FY20. Hence, the ownership of FIIs is almost 1.4 times that of DIIs, though it has come down from 2.2 times in the last five years.