>FII PUMPS MONEY IN INDIA (EDELWEISS)

Who moved my pie? Tracking institutional flows and asset allocation

Strong FII buying pushes up Indian equities in Q1FY10

■ FIIs were strong buyers of Indian equities in Q1FY10, pushing markets up ~50%

• FIIs hold the largest chunk in India’s free-float market or one-half of what all domestic institutions together hold FII’s market hold. FII s activity (net flows) is an important determinant of India’s market movement. Q1FY10 saw substantial buying of ~USD 6 bn across sectors (highest in BFSI and real estate) after five consecutive quarters of net outflows. Maintain strong O/W on BFSI

■ Domestic institutional investors’ market activity subdued during the quarter

• Insurance: Insurance funds were marginal sellers of ~USD 0.3 bn. They sold stakes in most sectors, specifically in consumer discretionary and utilities. They were marginal buyers of BFSI and telecom

• MFs: MFs were marginal buyers during the quarter with ~USD 0.7 bn of net inflows into equities. They primarily bought utilities and energy, and sold BFSI

■ Spate of QIP issuances resulted in lower promoter holding in certain stocks

• With strong liquidity in the system, many companies looking to deleverage or for business investments were able to raise capital through equity issuances to Qualified Institutional Buyers (QIBs). This resulted in dilution of promoter holding in such stocks.

To see full report: FII PUMPS MONEY IN INDIA