Calcutta, Nov. 10: Foreign institutional investors (FII) do not seem to have lost appetite for Indian technology despite redemption pressure back home and the slowdown in the sector.
The last 12 months have seen foreign institutions increase their stake in most frontline infotech companies, even as the promoters of some of them pared their holdings.
Companies that have attracted significant foreign portfolio investment over the last one year are Infosys Technologies, Satyam Computer Services, Digital GlobalSoft, NIIT and Wipro.
Explaining the interest in the technology sector, analysts with foreign institutions said Indian technology companies were still growing, and at a faster rate than European and American technology firms. “Our position on Indian software companies is best described as ‘cautiously optimistic’. We do not want to burn our fingers again. We will continue to buy shares of the frontline technology companies as long as they achieve the projected growth,” an analyst said.
The FII holding in Digital—the 51 per cent Indian subsidiary of the Compaq-Hewlett Packard combine—has doubled over the last 12 months. The combined FII stake in Digital, pegged at 14.91 per cent as of September 30, was up 7.58 per cent in a year. Merrill Lynch Capital Markets Espana holds 2.25 per cent.
Satyam, too, saw a substantial increase in foreign institutional investment. FII holding increased 6.69 per cent to 42.32 per cent in the space of a year ended September 30. Warburg Pincus holds 5.33 per cent while Templeton Global Advisors hold close to 5 per cent through a couple of accounts. UBS Warburg, Janus Overseas Fund and ABN Amro are among other leading overseas investors.
In addition to the FIIs’ stake of 42.32 per cent, 10.6 per cent of Satyam’s equity is traded as American Depository Shares. Thus, total foreign holding stands at 54.53 per cent, which includes shares held by NRIs and overseas corporate bodies.
Infosys, with an FII holding of 37.67 per cent on September 30, has 350 foreign institutions invested in it. Their stake increased 3.06 per cent over the past 12 months.
Emerging Market Growth Fund holds 6.2 per cent in the company, while Morgan Stanley controls 2.38 per cent. Other leading investors include Goldman Sachs, UBS Warburg and Government of Singapore Investment Corporation.
Foreign institutional holding in NIIT jumped by close to 2 per cent to 35.09 per cent. Leading investors in the company are Merrill Lynch, Morgan Stanley and ABN Amro.
In Wipro, which has a free float of only 16 per cent—the balance being held by the promoters—FII holding increased marginally to 3.12 per cent.
Meanwhile, FIIs were net investors in equities at Rs 69.6 crore ($ 14.4 million) even as they remained away from the debt market for the trading week ended November 8.