The Telegraph
Since 1st March, 1999
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FIIs, local institutions take opposite calls

Mumbai, Aug. 14: Foreign investors and local institutions have gone different ways in the stock surge that has swept the sensex tantalisingly close to 4000 points.

In approaches that are a study in contrast, they have wagered on separate sets of shares to drum up their investments in a manner that pays off in the long term.

Indian institutions led by heavyweights, Life Insurance Corporation of India and Unit Trust of India, have been washing their hands of stocks that foreign fund managers have scooped up in recent weeks.

FIs, on the other hand, are soaked in shares that foreign investors have ignored or shunned. Both sides have won the first round as the stocks they backed did well.

Financial institutions have put their money on fast moving consumer goods (FMCG) firms, but foreign institutions have been increasingly reluctant to hold on to them.

Only weeks before Hindustan Lever, the FMCG super nova, came out with its results, some foreign brokerages swarmed its counter with sell orders. But they were caught on the wrong foot when the stock bounced.

Foreign funds have been hooked to banks, a group which they feel is a good bet in a choppy market. Analysts say the move was perfectly timed, coming as it did weeks before the government brought in a legislation aimed at giving banks and regulators more teeth. Mid-cap (small) bank shares landed in their shopping bag as well.

A DSP Merrill Lynch report says local financial institutions have been heavy buyers in ACC, Gujarat Ambuja and Gail. By contrast, foreign funds were net sellers. However, the swings in these share prices have favoured the Indian fund managers.

The report says, local mutual funds led by UTI have been net sellers, but have been buyers in ACC, Gujarat Ambuja, Gail and Indo Gulf. LIC was the most active on the trading floor, booking profits at every turn.

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