Foreign portfolio investors (FPIs) continued to lose ground in India's equity markets during the June quarter, with their ownership in the country's top listed companies falling to a 16-year low, even as domestic investors tightened their grip on corporate India, according to a Morgan Stanley analysis of the top 75 companies.
The report showed domestic ownership rising 37 basis points sequentially to a record 29%, driven primarily by continued buying from retail investors and mutual funds. At the same time, promoter ownership also increased for the second consecutive quarter, adding 37 basis points so far this year, signalling higher conviction among controlling shareholders.
As of the June quarter, promoters remained the single-largest shareholder group with a 43% stake, followed by foreign portfolio investors at 21.3%. Domestic institutional ownership continued to deepen, with mutual funds accounting for 13.9%, financial institutions such as banks and insurers holding 10.1%, Indian public shareholders owning 8.5%, and NRIs and others accounting for the remaining 3.2%.
The report also showed lower portfolio churn during the quarter. Sector positioning remained unchanged, with institutions maintaining their largest overweight position in financials, while industrials remained the biggest underweight.
Stocks In Focus
Among foreign investors, Adani Ports emerged as the biggest purchase during the quarter, while Indraprastha Gas Ltd. (IGL) saw the largest selling. Promoters increased their stake the most in Bharti Airtel, while reducing exposure to Coal India.
Domestic institutions displayed a different set of preferences. Mutual funds were the biggest buyers of IGL while trimming holdings in Wipro. Financial institutions, including banks and insurance companies, added the most to IndusInd Bank while cutting exposure to UPL. Retail investors increased their holdings in Zee Entertainment, while reducing stakes in Yes Bank.
The report also showed that Shriram Finance recorded the biggest increase in aggregate institutional ownership during the quarter. From a positioning standpoint, institutional investors remained the most overweight on ITC while continuing to hold their largest underweight position in Reliance Industries.
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