Tall order

Mumbai, Jan. 30: Foreign institutional investors (FIIs) mopped up more shares in the country?s top 50 companies than local entities, including the owners themselves.

An unrivalled 18 per cent of the turnover of key stock exchanges comes from foreign funds, which even take more deliveries than other classes of buyers, an analyst said.

The funds have emerged as the largest investors in the country, just behind those who hold controlling stakes in firms. ?FIIs were the only net buyers in the quarter ended December. Last year, they were the most significant buyers of shares,? a JM Morgan Stanley report said. Local institutions, mutual funds and retail investors were sellers in the calendar year as well as the last quarter.

?We can match their muscle only when pension funds are allowed to invest in the equity market,? a UTI Mutual Fund executive director said. His firm?s investments are skewed towards shares, unlike other mutual funds, which have much of their cash parked in debt.

Investments by local pension funds could stabilise markets as they are typically long-term players whose strategies do not change with the swings in global finance.

Changes in the ownership pattern of Indian firms intensified during the last quarter of 2004, when the market rose 18 per cent. This was also the time that saw a shift in the behaviour of foreign institutional investors as the dollar weakened against other currencies.

During this period, the FII stake in India?s top 50 companies by market capitalisation rose 1.1 per cent quarter-on-quarter to 21.1 per cent ? the sharpest rise in four quarters.

National Thermal Power Corporation and TCS were among the companies that benefited from the burst of FII cash. The two stocks, listed only last year, saw investments to the tune of $704 million and $170 million respectively. Bharti Tele-Ventures and ONGC followed them, with tallies of around $160 million and $142 million.