Mutual funds holding in NSE companies at all-time high

New Delhi, Feb 7

The share of domestic Mutual Funds (MFs) in companies listed on NSE rose to an all-time high of 8.81 per cent as on December 31, 2023, from 8.73 per cent as on September 30, 2023, powered by strong net inflows of Rs 58,198 crore during the quarter, as per Primeinfobase, an initiative of PRIME Database Group.

Meanwhile, Life Insurance Corporation of India (LIC), India’s largest institutional investor, saw its share (across 277 companies where its holding is more than 1 per cent) declining to an all-time low of 3.64 per cent as on December 31, 2023 from 3.73 per cent as on September 30, 2023.

According to Pranav Haldea, Managing Director, PRIME Database Group, this was primarily on account of profit booking to take advantage of bullish markets. Insurance companies, as a whole, sold a net of Rs 5,622 crore during the quarter, a major part of which is attributable to LIC since LIC commands a lion’s share of investments in equities by insurance companies (at least 68 per cent share or Rs 13.02 lakh crore).

DIIs seem set to overtake the FIIs in the next few quarters. The gap between FII and DII holding narrowed further to an all-time low in this quarter with DII holding now being just 12.23 per cent lower than FII holding. The widest gap between FII and DII holding was in quarter ending March 31, 2015, when DII holding was 49.82 per cent lower than FII holding, the report said.

Meanwhile, the share of the Government (as promoter) increased to a 6-year high of 9.38 per cent as on December 31, 2023 on the back of strong performance of several PSUs, including LIC (The BSE PSU Index rose by 23 per cent as against a 10 per cent increase in Sensex during the period). However, to put this in perspective, over a 15-year period, the share of the Government has declined considerably, from 22.48 per cent as on June 30, 2009, primarily due to the Government’s divestment programme and not enough new listings.

On the other hand, the share of private promoters declined to a 5-year low of 41.31 per cent as on December 31, 2023. Over the last one year alone, it has fallen by 330 basis points from 44.61 per cent on September 30, 2022. According to Haldea, stake sales by promoters to take advantage of bullish markets, relatively lower promoter holding in some of the companies now coming out with IPOs and getting listed and also overall institutionalisation of market has resulted in this.

There were 13 companies in which the trinity of promoters, FIIs and DIIs all increased their stake during the quarter these being (in descending order by market capitalisation) Westlife Foodworld, Gujarat Narmada Valley Fertilizers & Chemicals, Wonderla Holidays, Ami Organics, Thangamayil Jewellery, Unichem Laboratories, Shankara Building Products, Snowman Logistics, Bajaj Healthcare, Associated Alcohols & Breweries, Macpower CNC Machines, Sukhjit Starch & Chemicals and Chembond Chemicals.