EIH, Castrol, Cyient among mid-cap counters in the sell zone of FIIs

Indian stock indices have been rising for the past few days and crossed a critical hump on Wednesday as the 30-stock benchmark Sensex closed above the 60,000 mark. This shows how the markets have bounced back after gaining over 15% over the last three months, and are now close to the all-time highs.

Foreign portfolio investors (FPIs), or foreign institutional investors (FIIs), 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 have cut stake. In particular, they sold stake in as many as 81 companies that have a valuation of $1 billion or more last quarter. This is much less the 92 companies where they divested shares in the preceding quarter.

Top mid-caps that saw FII selling

FIIs cut stake in 26 mid-caps, or firms with a market capitalisation between Rs 5,000 crore and Rs 20,000 crore, in the last quarter.

This is a fifth less than the number of such firms where they trimmed holding in the January-March 2022 period and still lower than the comparable number in October-December 2021 period. This means they have been turning less bearish on mid-caps as the markets corrected after the peak last Diwali.

This is a similar trend as the large caps pack where they cut stake in fewer such companies last quarter.

Ajanta Pharma, Godrej Industries, Carborundum Universal, Central Bank of India, Bajaj Electricals, Alembic Pharma, Brigade Enterprises, Castrol India, EIH, Cyient, Finolex Industries and Granules were among the top stack of mid-caps that saw offshore investors turn sellers.

Lower down the order there were names like Allcargo Logistics, eClerx Services, BEML, Finolex Cables, Balrampur Chini, Avanti Feeds, Cera Sanitaryware, Garware Technical, Indiabulls Housing Finance, Caplin Point, Edelweiss Financial, CCL Products, Ceat and HEG where the offshore investors divested shares.

Ajanta Pharma, Carborundum Universal, Bajaj Electricals, Castrol India, Brigade Enterprises, Cyient, Balrampur Chini Mills and Allcargo Logistics were among the mid-caps that have been in the sell basket for the last two consecutive quarters.

If we look at mid-cap stocks where FIIs sold 2% of more stake last quarter we get just two names: CCL Products and HEG.