With the economy set to grow at a scorching pace amid prolonged volatility in the market, foreign institutional investors (FIIs) have hiked exposure in banking and healthcare scrips for the quarter ended June 2010.
According to data, on a net basis, they have invested Rs 967 crore in Sensex (^BSESN : 17955.82 +46.36) firms and pulled out about Rs 7,123 crore from non-Sensex companies (largely mid-cap firms). This essentially shows that FIIs have largely been risk-averse in the past quarter.
FIIs have raised their stakes the most in companies such as Phillips Carbon (8.2%), Bank of Rajasthan (6.6%) and Srei Infrastructure Finance (6.23%). They have hiked stakes by more than 4% in GMR Infrastructure and Dhanalaxmi Bank and by more than 3% in Axis Bank, Zensar Technologies, Bajaj (BAJAJAUTO.NS : 2101.05 0) Finserv and South Indian Bank.
In terms of actual investments, FIIs have invested the most in State Bank of India (SBIN.NS : 2449 +9.15) (Rs 2,126 crore). They have also pumped in a sizeable amount in private sector banks like Axis Bank (Rs 1,776 crore), HDFC Bank (Rs 937 crore) and ICICI Bank (ICICIBANK.NS : 902.4 +20.55) (Rs 693 crore). Major Sensex firms in which they have invested substantially include HDFC (Rs 759 crore), Larsen & Toubro (Rs 645 crore) and Hero Honda (Rs 478 crore). Banks, with their larger weight in major indices, have been the clear favourites with FIIs. "The economy is on a firm footing and is set to grow by 8-9%. This will spur credit growth, which in turn will help the banking industry," said Andrew Holland, CEO - Equities, Ambit Capital. The 3G auction, which has eased the fiscal burden on the government, will also help the banking sector, feel experts.
Among Sensex firms, FIIs have invested Rs 5,839 crore in nine companies and pulled out Rs 4,872crore from six others. They have reduced their stakes in heavyweights like Tata Steel (TATASTL.BO : 509.2 -2.1) (4%), Maruti Suzuki (1.03%), Infosys Technologies (INFOSYS.BO : 2778.3 +19.35) (0.52%) and Reliance Industries (RELIANCE.NS : 1062.95 -10.5) (0.39%). The outlook for Tata Steel has been negative because commodity prices have taken a hit in the last quarter due to turmoil in global economy, reckon experts.
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