Domestic investors have boosted their ownership in Indian equities to a record 29%, surpassing the decrease in foreign participation, as per a recent report by Morgan Stanley. Foreign portfolio investor (FPI) ownership in Indian equities hit a 16-year low in the March quarter. Domestic ownership in the listed universe saw a 40 basis points surge from the previous quarter, mainly led by domestic institutions, which raised ownership by 58 basis points to 19.3%. Direct household ownership also increased by 20 basis points.
Resilient local flows and reduced foreign positioning are expected to bolster demand for primary issuances and drive an uptick in buybacks, the report highlighted. Institutions favored financials and consumer discretionary shares, while maintaining an underweight stance on materials, energy, healthcare, and utilities.
Foreign investors maintained a significant overweight position in financials, despite trimming active positions in the quarter. Industrials remained their primary underweight sector. Domestic institutions, on the other hand, sustained their major underweight position in financials, albeit narrowing it, with consumer staples being their primary overweight position.
In terms of liquidity, foreign institutional investors (FIIs) continued as net sellers, disposing of equities worth Rs 1,369 crore during the week, while domestic institutional investors (DIIs) purchased equities worth Rs 9,782 crore. The domestic equity markets closed the week on a weak note, with benchmark indices witnessing a 2% decline, influenced by escalating tensions in West Asia, a surge in crude oil prices, and substantial selling in IT stocks.
The Sensex and Nifty ended the week lower by 2.3% and 1.9%, respectively, on a weekly basis. Market analysts noted a volatile week with a cautious tone, as recovery efforts were hindered by renewed US-Iran tensions and ongoing disruptions in the Strait of Hormuz.
