Mumbai, Nov. 12: Foreign institutional investors (FIIs) have stepped up their investments in Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) in the quarter ended September 30 from the previous quarter ended June 30, despite the apex court ruling on the companies’ selloff.
The Supreme Court judgement of September 16 restrained the Centre from proceeding with the privatisation of HPCL and BPCL, saying that divestment in these companies could not be done without prior approval from Parliament.
The government, which currently holds 51 per cent stake in HPCL, had proposed to offload 34.01 per cent to a strategic partner. The companies in the race for acquiring the stake included Reliance Industries Ltd (RIL), British Petroleum, Kuwait Petroleum, Petronas and Shell.
Though the verdict had an immediate effect on the share prices of the oil majors, foreign investors have upped their holdings in both these companies. FII holding in BPCL in the quarter ended September 30 shot up to 11.59 per cent from a little under 10 per cent in the preceding quarter ended June 30.
FII holding in HPCL increased to 13.35 per cent in the second quarter from 10.51 per cent in the previous quarter.
The increased FII investments in HPCL and BPCL should not come as a surprise considering the fact that these companies have been the driving forces for the recent bull-run on the stock markets. ASK Raymond James Securities strategist Jignesh Shah, however, feels that FII investments in oil stocks should continue to look up given their attractive valuations.
“Almost all oil stocks are now available at reasonable valuations. When such big companies are available at lower multiples, value investors buy into that stock,” he said. Shah added that foreign investors have been focussing more on stocks' valuations and their potential, rather than giving priority to an event.
Figures available with the Securities and Exchange Board of India (Sebi) reveal that net investment of FIIs in equities are over Rs 2,125 crore till November 11. Their total investments for the calendar year is put at over Rs 27,600 crore in both equity and debt.