Amidst the pandemic Gloom and Doom surrounding Equity Investors globally and the consequent effect of lockdown on economies, India in our view should be able to overcome this crisis.
The shift towards localisation coupled with the rapid strides made towards digitalisation
Ownership of Domestic Financial Institutions (DII’s) in NIFTY stocks have exhibited a steady uptrend since last 3 years post DEMO primarily driven by Systematic Investment Plans (SIP’s)
As seen by the reports SIP flows have virtually doubled from their quarterly run rate of ~₹12500 crores during the March quarter of 2017 to ~₹25000 crores by the December quarter of 2019.
It is interesting to observe the maturity of the Indian Retail Investor reveals a similar trend even during the month of January and February 2020, a period when FII’s have begun pulling out money from Indian Equities.
FII’s on the other hand seem to be playing the India Story through Financials and are in fact the largest non-promoter owners of Financials (BFSI), a strategy which seems to be in line with the increase in the sectors weight in the NIFTY. The steep fall seen in the month of March 2020 reflects the effect of the Rs62000 crores outflow in March largely on account of Financials
Going forward we believe that the asymmetry created by the skewed weightage of BFSI would get corrected to include credible companies from other sectors which do not have a global connect.
Pharmaceuticals could perhaps be the only exception to this as the Pandemic forces the FDA to curtail the witch hunt on Indian Drug Majors going on since years.
As per the report ownership of Mutual Funds has increased from 10% to 15.5% over the last three years on the basis of free float MCap as per data released by the NSE.
The period has also witnessed an increase in shareholding of Indian Promoters from 30% to over 32% as stock prices in the broader market corrected due to the prolonged period of polarisation rampant during this period.
Since it is felt that the worst is over for the Indian stock markets, the rebound may be the option -perhaps-in tranches and in baby steps- feel the Market Experts.
Pharma shares could perhaps be the best bet given the momentum of demand for their products world over. Long term investors pile up Pharma shares for getting good returns.