FIIs raise stake in big FMCG stocks in Jan-Mar

Attracted by good financial performance and valuations, foreign investors increased their exposure to large fast-moving consumer goods companies such as ITC and Britannia in the three months to March this year.

On the other hand, domestic institutional investors (DIIs) have been mostly betting on mid caps in the sector.

Of the 16 large FMCG firms, 11 companies saw an increase in their respective foreign institutional investors (FIIs) holding in January-March over the previous quarter, according to a report by A C Choksi Share Brokers.

DIIs, on the other hand, raised their holdings on only three companies – Emami ,Dabur and Asian Paints – and reduced stake in the remaining 13 stocks during the March quarter.

“FIIs are primarily betting on large caps while DIIs are positive on mid caps in the sector,” the brokerage firm noted.

In some companies like ITC, Britannia and Bajaj Corp , FII holdings have increased by more than a percentage point. However, they reduced ownership in United Spirits ,Marico , Dabur, Emami and Asian Paints in the quarter.

Experts believe that FIIs have been showing interest in the Indian FMCG companies due to their defensive appeal and attractive valuation.

“FIIs are betting on FMCG stocks because of defensive appeal and these stocks are performing well on earnings front. Another major reason for hike in FIIs ownership FMCG stocks was that these stocks are available at good price,” Destimoney Securities MD and CEO Sudip Bandyopadhyay said.

Apart from ITC, Britannia and Bajaj Corp, FIIs increased stakes in Hindustan Unilever , Nestle ,Jyothy Laboratories , Colgate , Godrej Consumer Products Ltd (GCPL) , GlaxoSmithKline Consumer Healthcare , Zydus Wellness and Berger Paints during the March quarter.

FIIs had pumped huge capital into equity markets in January-March. In the the next two months, foreign investors had pulled out funds from the markets.

Foreign investors put in a record Rs 43,951 crore in the first three months of 2012, while in the next two months they withdrew a total of Rs 1,456 crore.

The BSE benchmark’s Sensex rose by more than 12 per cent during the quarter under review to close at 17,404.20 on March 31, 2012.

Interestingly, over the past 12 months, FIIs have increased their positions in all the stocks other than Marico, Jyothy Labs, Dabur, United Spirits and Zydus Wellness.

On the contrary, DIIs have been reducing positions in consumer stocks except in Marico, Emami, Jyothy Labs, Dabur and United Spirits over the past 12 months.

(curtsey : money control)

Rupesh Yatesh Dalal
Head Research Department

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