An analysis of shareholding pattern for 143 of the BSE 500 companies that have declared their March-end shareholding pattern so far shows that both domestic institutional investors, including insurance companies, banks and retail investors, reduced their stake as they sold shares heavily last quarter.
Domestic institutional investors (DIIs) reduced their stake in 97 companies while increasing holdings in 39 firms. Following this, their average shareholding in these 143 companies has come down by 38 basis points (bps) on a sequential basis and by 58 bps for the full year the highest fall in the last five years.
Similarly, average shareholding of retail investors has come down by 5 bps on-quarter as they continued to book profits in the equity markets.
"Domestic investors are shying away due to redemption pressures. But going ahead, I feel incremental savings will start flowing into equity from other physical assets like gold and real estate," said Navneet Munot, CIO, SBI Mutual Fund.
Among domestic institutions, the Life Insurance Corporation (LIC) was among the biggest sellers, reducing stake in several frontline stocks where the prices had appreciated a lot. In all, the DIIs sold shares worth Rs34,000 crore last quarter, while retail investors were net sellers by Rs1,000 crore.
FIIs, on the other hand, have hiked stake in 93 companies while reducing stake in 47, to take their average stake in these companies up from 13.48% in December quarter to 13.96% in the March quarter an all-time high for this set of 144 companies.
K Ramanathan, executive director and CIO, ING Investment Management, said the inflows from foreign investors have been significantly high for the past few years on account of abundant global liquidity and lower interest rates prevailing in developed economies.
"FIIs have shifted their focus from developed markets to emerging markets, where they find higher growth comparatively. Domestically, fund houses and insurance companies are faced with heavy redemption from investors," he said.
FIIs poured in Rs.54,750 crore in Indian equity markets during the quarter the second-highest quarterly inflows since September 2010.