Mumbai, Aug. 27: Foreign institutional investors (FIIs) have been a major force in driving key indices to record levels and now their ownership of Indian stocks is close to an all-time high.
The FII holding in Sensex companies has regained a peak of 27 per cent, last seen in 2004-05. Foreign investors collectively hold around 22.5 per cent of the market cap in the entire marketplace.
With the cumulative market capitalisation now at over Rs 92 lakh crore, this effectively means that their holding is worth nearly Rs 21 lakh crore.
According to a report by Bank of America Merrill Lynch (BofA-ML), the strong inflow from FIIs over the last five years has now resulted in an all-time high FII ownership of the Indian markets.
The report said FII investment is higher than that seen in March 2009 when it accounted for 15 per cent of the total market cap and 36 per cent of free float. In 2009, foreign investors had pumped in $17.45 billion into domestic equities and it was in excess of $20 billion in 2013.
In fact, FII investment in Sensex companies is now close to the peak seen in 2004-05. Market experts aver that if the domestic economic recovers and the Union government goes ahead with reform measures, this record may be broken in the months to come.
While the growing interest shown by FIIs has led to investment limits in many companies getting breached, BofA-ML pointed out that there are still certain sectors where there is room for them to buy.
Some of the companies where FIIs have exhausted the limits and are in the RBIís restricted list include Axis Bank, HDFC Bank, IDFC, IndusInd Bank, Lupin, Maruti and Titan among others. The sectors where there is still some room comprise banks, cement, auto and consumer goods.
Market circles feel FIIs have been interested in private banks and companies such as HDFC as they have posted stable growth rates despite challenging times.