NRI Real Estate and Property Investment in India
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FIIs raise stake in Indian firms
Friday, September 26, 2008

The FIIs (Foreign Institutional Investor) have increased their shareholding in Indian firms. Public shareholding includes individual holding, holding of financial institutions, mutual funds, foreign portfolio investors, non-resident Indians and employees. Their shareholding has increased in 89 of the 100 sample companies during last five years from June 2003 to June 2008. In fact, they alone had more than 25% shareholding in 15 sample companies last June against two in 2003.

In contrast, the individual shareholding has witnessed a sharp deceleration during this period. It has declined in 88 of the sample companies and only 12 of them have more than 25% individual shareholding now compared to 28 in 2003. For, the individual investors who almost always are the victims of market turmoil had proved smarter last year and taking advantage of the rising market sold their holdings in a large scale and booked profit. Of course, individual investors were not alone who took advantage of the rise in stock prices last year. The banks and financial institutions also took advantage of the rising market to prop up their bottom lines. Commercial banks and financial institutions in India have traditionally been major stakeholders of corporate equity, often by default, though. The sharp rise in scrip prices gave them a chance to offload their holdings. The holding of banks and financial institutions declined in as many as 69 of the 100 sample companies including such blue chips as Tata Steel, Hindalco, Infosys Technologies, MRF, HCL Infosystems and Reliance Infrastructure.

But what is surprising is that even the promoters have witnessed a fall in their shareholding during this period. The shareholding of promoters has declined in about two-thirds of the sample companies during this period. The big brothers such as the Tatas, Ambanis or Aditya Birla, however, have increased stake in their blue chip companies despite a general deceleration in promoters' holding.

 

 

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