FIIs flee bourses but up stake in Gujarat firms

Indian bourses were worried about the flight of foreign institutional investors (FII) in the second quarter of this year, but listed companies from Gujarat seemed to be the exception. The FIIs actually increased their holdings in 11 of the 16 or so listed Gujarat companies in the same period.

Compared to the first quarter that ended on June 30, FII holdings in the quarter ended September 30 went up by more than 10% in Arvind Ltd, Gujarat Fluorochemicals, Elecon Engineering, Torrent Pharmaceuticals and Riddhi Siddhi Gluco Biols. These five companies were the top gainers from FII investment in this period.
The FIIs have found Gujarat companies in the pharmaceuticals, power, textiles, chemicals and engineering sectors particularly attractive for investment.

However, oil & gas companies, port & infrastructure and furniture retail chains have seen a decline in FII holdings. Timbor Home, Deep Industries, Zydus Wellness, Mundra Port & Special Economic Zone (MPSEZ) and Torrent Power are the companies in which FII holdings declined in the second quarter.

Among the 16 listed companies, the denim king of the world, Arvind, registered the maximum rise in FII holdings. The FII stake in Sanjay Lalbhai-promoted company, Arvind Ltd, went up from 10.3% in June 2011 to 12.83% in September 2011.

FII stake in the companies of Gautam Adani, Pankaj Patel, Sudhir & Samir Mehta, Karsanbhai Patel and Bhadresh Shah — the five millionaires of Ahmedabad -rose in September 2011. Of the Adani Group’s three listed entities, two companies — Adani Enterprises and Adani Power — attracted FII investment while the MPSEZ registered a marginal decline. Timbor Home, which got listed on Indian stock exchanges recently, lost its FII stake completely. FII holdings in the new company fell from 1.02% in June 2011 to zero in September 2011.

In the last six months, the Indian rupee depreciated by more than 10% against the US dollar, and was trading at around Rs50 to a dollar. However, due to the withdrawal of FII holdings from Indian bourses, the rupee depreciated still further to levels of Rs45 to 49.80 against the US dollar. "However, it was found that in some companies, especially those based in Gujarat, the FIIs had increased their holdings. In the current scenario, this generates positive sentiments for all the companies in which FII holdings have gone up," said Nilesh Kotak, MD & CEO of Dhanvarsha Fincap Pvt Ltd.