Domestic investors raised their shareholding to a record 29 per cent in Indian equities, offsetting the decline in foreign participation, a new report has said.
Foreign portfolio investor (FPI) ownership in Indian equities dropped to its lowest level in 16 years in the March quarter, the report from Morgan Stanley said.
Domestic ownership in the listed universe surged 40 basis points from the previous quarter. With the increase primarily driven by domestic institutions, which raised ownership by 58 basis points to 19.3 per cent. Direct household ownership rose 20 basis points.
Resilient local flows and weaker foreign positioning could support demand for primary issuances and a pick-up in buybacks, it said.
Institutions gave an overweight call on financials and consumer discretionary shares and remained underweight on materials, energy, health care and utilities.
Foreign investors held their largest overweight position in financials, although they reduced active positions during the quarter. Industrials remained their biggest underweight sector, the report said.
Domestic institutions maintained their largest underweight position in financials, though that underweight position narrowed. Consumer staples remained their largest overweight position.
On the liquidity front, foreign institutional investors (FIIs) remained net sellers, offloading equities worth Rs 1,369 crore during the week, while domestic institutional investors (DIIs) bought equities worth Rs 9,782 crore.
The domestic equity markets closed on a weak note this week, with benchmark indices declining about 2 per cent amid escalating tensions in West Asia, a sharp spike in crude oil prices, and heavy selling in IT stocks weighing on sentiment.
On a weekly basis, headline indices Sensex and Nifty ended lower, falling 2.3 per cent and 1.9 per cent, respectively.
According to analysts, markets remained volatile with a cautious undertone during the week, as early recovery attempts fizzled out amid resurfacing US-Iran tensions and continued disruptions in the Strait of Hormuz.
