Low FII holding lets them beat rest
PN concerns may have taken a toll on the broader market but it has spared many such stocks where foreign institutional investors (FIIs) are holding either nil or insignificant stake.
By Vijay Gurav, TNN |
MUMBAI: PN concerns may have taken a toll on the broader market but it has spared many such stocks where foreign institutional investors (FIIs) are holding either nil or insignificant stake.
Investors have apparently taken a fancy for second-rung stocks out of FII focus, which have emerged as the biggest outperformers amid PN-triggered meltdown in the past four days. While FIIs have poured huge money in shares across sectors, there still exist many, including fundamentally sound ones, where they have not taken much or any exposure.
This trend is mostly visible among small cap companies where promoters hold a significant stake, say analysts. There is not much scope for FIIs with huge investment appetite to put money in closely-held companies as the floating stock is quite low, they add.
The list of the out-performers with low/nil FII holding included companies like Walchandnagar Industries, State Trading Corporation (STC), Indian Hume Pipe, Parry Agro Industries and Jai Corporation, among a few notable examples. Their shares have risen between 11.5% and 22.2% even while the Sensex crashed nearly 1,500 points, or 8%, to 17,560 during October 15 to 19.
“Stocks of companies out of FII focus may not see the kind of selling being witnessed by many others, with large foreign holding, currently reeling under PN-triggered bear hammering. However, one has to take investment decisions on the fundamental background, irrespective of how much FIIs hold in a particular company,” said BR Bagri, chairman & CEO of, BLB, a Delhi-based broking firm.
Of the above mentioned stocks, STC has rallied smartly even amid extremely bearish market conditions. Hitting 5% upper circuit to touch a new high of Rs 623.5 on Friday, the stock has shot up 118% in the past one month.
STC is a public sector company as, according to shareholding pattern as on June 30 ’07 filed with the BSE, the government held a 91% stake while FII holding was nil. Retail investors and domestic institutions held 5.5% and 2.3%, respectively, in the company’s Rs 30 crore equity capital.
Walchandnagar Industries is another notable example where the stock soared to a new high of Rs 6,850, before ending 2.4% down at Rs 6,460 on Friday. It has a small equity of Rs 3 crore of which 48% is held by promoters and 29% with retail investors. FIIs held a negligible 0.2% as on September 30 ’07. The company posted a sharp 165% rise in net profit to Rs 8.2 crore while sales grew 86% to Rs 158 crore during the quarter ended June 30 ’07.
The list of the high-flyers also includes Indian Hume Pipe which scaled a peak of Rs 888.8 on Thursday. Soaring 90% in the last one month, the scrip, however, closed 6.7% down at Rs 759 on Friday.
Having equity capital of Rs 4.85 crore, Indian Hume Pipe is a closely-held company with a 70% promoter holding and a 26% retail holding. FIIs do not hold any stake, according to the shareholding pattern filed as on September 30 ’07 filed with the BSE.
The company’s past performance, however, did not inspire much confidence as it recorded a sharp 73% decline in net profit to Rs 1 crore on 33% lower sales of Rs 53 crore during the quarter ended June 30 ’07.
Investors have apparently taken a fancy for second-rung stocks out of FII focus, which have emerged as the biggest outperformers amid PN-triggered meltdown in the past four days. While FIIs have poured huge money in shares across sectors, there still exist many, including fundamentally sound ones, where they have not taken much or any exposure.
This trend is mostly visible among small cap companies where promoters hold a significant stake, say analysts. There is not much scope for FIIs with huge investment appetite to put money in closely-held companies as the floating stock is quite low, they add.
The list of the out-performers with low/nil FII holding included companies like Walchandnagar Industries, State Trading Corporation (STC), Indian Hume Pipe, Parry Agro Industries and Jai Corporation, among a few notable examples. Their shares have risen between 11.5% and 22.2% even while the Sensex crashed nearly 1,500 points, or 8%, to 17,560 during October 15 to 19.
“Stocks of companies out of FII focus may not see the kind of selling being witnessed by many others, with large foreign holding, currently reeling under PN-triggered bear hammering. However, one has to take investment decisions on the fundamental background, irrespective of how much FIIs hold in a particular company,” said BR Bagri, chairman & CEO of, BLB, a Delhi-based broking firm.
Of the above mentioned stocks, STC has rallied smartly even amid extremely bearish market conditions. Hitting 5% upper circuit to touch a new high of Rs 623.5 on Friday, the stock has shot up 118% in the past one month.
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STC is a public sector company as, according to shareholding pattern as on June 30 ’07 filed with the BSE, the government held a 91% stake while FII holding was nil. Retail investors and domestic institutions held 5.5% and 2.3%, respectively, in the company’s Rs 30 crore equity capital.
Walchandnagar Industries is another notable example where the stock soared to a new high of Rs 6,850, before ending 2.4% down at Rs 6,460 on Friday. It has a small equity of Rs 3 crore of which 48% is held by promoters and 29% with retail investors. FIIs held a negligible 0.2% as on September 30 ’07. The company posted a sharp 165% rise in net profit to Rs 8.2 crore while sales grew 86% to Rs 158 crore during the quarter ended June 30 ’07.
The list of the high-flyers also includes Indian Hume Pipe which scaled a peak of Rs 888.8 on Thursday. Soaring 90% in the last one month, the scrip, however, closed 6.7% down at Rs 759 on Friday.
Having equity capital of Rs 4.85 crore, Indian Hume Pipe is a closely-held company with a 70% promoter holding and a 26% retail holding. FIIs do not hold any stake, according to the shareholding pattern filed as on September 30 ’07 filed with the BSE.
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The company’s past performance, however, did not inspire much confidence as it recorded a sharp 73% decline in net profit to Rs 1 crore on 33% lower sales of Rs 53 crore during the quarter ended June 30 ’07.
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