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.
