CARE Ratings, FIEM, Hikal, Arvind among small cap stocks where FIIs cut stake last quarter

Indian stock indices have had a heady bounce back from the recent lows of June. After climbing by nearly a fifth over the last eight weeks, the benchmark indices are now just 2-3% short of the all-time peak touched last October.

Foreign portfolio investors (FPIs), or foreign institutional investors (FIIs), who have become less dominant but still are an important factor determining the trajectory of the indices, had become more cautious about investing in India over the last one year.

In fact, in the October-December 2021 quarter, they were net sellers in Indian equities and pulled out over $5.1 billion in the process.

In the first six months of this year, FIIs had made their bearish sentiments apparent with net sales of equity securities worth $25 billion. This changed last month with FIIs being net buyers in the equity market after several months.

We scanned through the list of companies that have disclosed their shareholding patterns to get names where FIIs cut stake.

Top small caps that saw FII selling

FIIs cut stake in a little over 100 small-caps, or firms with a market capitalisation under Rs 5,000 crore, almost the same number where they sold shares in the previous quarter ended March 31, 2022.

In contrast, FIIs cut stake in fewer large and mid-cap stocks, which shows they were less bearish on mid to large sized companies.

FDC, Himadri Speciality, Gujarat Pipavav Port, Hikal, Dhani Services, Ahluwalia Contracts, Action Construction, Indo Count Industries, Ganesh Housing Corp, HIL, Butterfly Gandhimathi, Eveready Industries, Globus Spirits and Arvind are among the larger small-caps where the offshore investors turned bearish.

Lower down the order there are names like Cosmo First, Bajaj Consumer Care, Gravita India, Gulf Oil Lubricants, Amrutanjan Health, Greenply Industries, Cantabil Retail, Black Box, Anant Raj, HBL Power Systems, HOEC, Dish TV, Gati, Balmer Lawrie, Gokaldas Exports and FIEM Industries also saw them prune stake.

Globus Spirits, Ahluwalia Contracts, Arvind, Dhani Services, Indo Count Industries, and Gokaldas Exports are stocks that have now seen FIIs cut stake for two consecutive quarters.

If we look at small and micro-cap stocks with a valuation of at least $100 million, where FIIs sold 2% of more stake last quarter, we get six names: CARE Ratings, FIEM, HBL Power, Hikal, Bajaj Consumer Care and Eveready Industries.