>Identifying Over-Owned/ Under- Owned Stocks

FII Portfolio: U/W on Energy & O/W on Telecom decrease; U/W on Metals & Utilities fall
■ The quarter saw massive buying by the FIIs in Metals as they participated in the GDR/ADS issues of Sterlite & TISCO. This reduced the u/w of the metal sector. Sterlite and TISCO have entered the top-10 O/W stock list.

■ Overall financials continue to be the biggest over-owned sector. The top three positions in the over-owned list are Banking stocks (HDFC, ICICI and SBI) once again reiterating the known FII bias. Energy continues to be biggest under-owned sector, however buying in RIL coupled with index change led to decrease in the U/W on Energy.

■ Telecom was the only key sector which saw selling by the FIIs led by Bharti. This has reduced the O/W of Telecom for FIIs.

■ Key buys in this quarter were: Sterlite, Unitech, Tata Steel, RIL and Axis Bank. Key sells were ONGC, Bharti, BHEL, NTPC and ITC.

Domestic MF Portfolio: Industrials and Consumers major O/W; Energy, Financials and IT major U/W

■ Nifty moved to a “free float market capitalization weighted” method from the end of June’09 from the “market capitalization weighted” method. This has changed the O/W and U/W of domestic mutual funds for many sectors and stocks over the last quarter with respect to the Nifty.

■ Domestic mutual fund portfolio is in stark contrast with that of FIIs, with Industrials being major overweight sector, sector on which FIIs are only marginally positive. Consumer Staples is another sector where mutual funds are heavily overweight in contrast to FIIs who are U/W on the sector. They are also underweight on Financials on which FIIs are highly Over-weight.

■ On the similar lines of the FIIs domestic mutual funds are also under-weight Energy and IT.

■ During the quarter mutual funds bought Utilities, Financials and Autos and sold Telecom.

LIC: Net buyer
On the lines of FIIs and MFs who were major buyers, LIC also was a net buyer during the quarter. LIC bought Financials (ICICI Bank, PNB, SBI), Energy (RIL, ONGC) and Metals (SAIL, Tata Steel). In contrast to FIIs and MFs they bought Telecom (Rcom, Bharti) and sold Real Estate (Unitech).

To read the full report: INVESTMENT STRATEGY