DII (Mutual Funds etc.) Ownership In Stocks At Six Year High

The shareholding of domestic institutional investors (mutual funds, insurance companies etc.) (DIIs) in listed companies has risen to a six-year high, following an increase of 10 per cent in the value of their holdings, despite flat markets.

At the end of the June quarter, DII shareholding in National Stock Exchange-listed companies was 11.7 per cent, up nearly 100 basis points in 12 months, from data compiled by Prime Database. The value of their holdings touched a record high of Rs 11.74 lakh crore, a 12 per cent increase over the Rs 10.5 lakh crore at the end of the June 2015 quarter. The BSE 500 index remained flat in this period. 

By stock exchange data, DIIs had pumped nearly Rs 40,000 crore in the Indian markets in the four quarters ending June 2016. 

DIIs comprise domestic mutual funds, insurance companies and pension funds. The increase in DII ownership and value of their holdings is a positive sign for the Indian markets, largely dependent on foreign institutional investors (FIIs). 

The value of the latter FII holdings at the end of June was almost double that of DIIs, at Rs 20.1 crore. Their ownership stood at 20.1 per cent, making them the country’s largest non-promoter stakeholders. Within DIIs, state-owned Life Insurance Corporation of India (LIC) is one of the biggest investors. At the end of June, the value of its holding was Rs 4.6 lakh crore.

Some of the companies with high DII shareholding are Balmer Lawrie & Co (72.8 per cent), Gammon India (66.3), Consolidated Construction Consortium (56.4), IVRCL (52.6) and Monnet Ispat & Energy (50.1). During the June quarter, Bombay Rayon saw the highest increases in DII shareholding in percentage points, at 26.3. Sakthi Sugars (18.9 percentage point increase) and Rainbow Papers (11.45) were other companies which saw substantial increase.

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Direct Plans in Mutual Funds for those who want to invest on their own

Direct Plans in Mutual Funds for those who want to invest on their own

SEBI announced low-cost direct plans in August 2012 where each schemes have plans with lower expense ratio, where investors get in on their own thus AMC/fund houses have not to incur any marketing or distributor commission expense.

This move was to offset increase in expense ratio and other charges of AMCs.

But as the schemes take off from 1 January 2013, the mutual fund companies have found ways to discourage investors to go direct. The mutual fund companies are charging exit loads from 1-3% for switch to direct plans from existing accounts as there is no clarity on this issue from SEBI’s side. It is said that these moves are to protect interests of their distributors and mainly the top ones.

Direct plans are good for those investors who do research on their own and also are ready to do the procedural hassle. Others will continue to rely on advisors for advice on investing in good mutual fund.

It is unclear that weather SEBI wants to encourage or kill the MF industry again. It is noticeable that earlier SEBI introduced restriction on commission and entry load was banished. Still the number of folios declined rather than increase. As a result the number of mutual fund advisors shrank. The in 2012, SEBI again came with a breather for MF industry and advisors fraternity by introducing some ways by which AMCs can incentivize the advisors. IF SEBI wants that retail investors participation increases and equity cult spreads in India through MFs, then it has to rethink its MF industry perspectives and policies and give more room to AMCs and incentivize advisors for introduction of new accounts and investors in semi-urban and rural areas. Apart SEBI should undertake campaigning for investment in MF in association with AMFI.

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Indian Mutual Funds monthly buy highest in August-2011 after 38 months since June 2008

In a very positive note and condolence when Indian stock markets has grossly underperformed and in fact remained the 2^nd worst performing stock market after Bangladesh in Asia; the mutual fund industry has given glimpse of a silver lining.

 According to data released by Sebi, the monthly net investment by Indian mutual funds for august month was at Rs.2524. Such type of huge monthly buying was way back in June 2008, almost 38 months back.

It is a well known fact that FIIs have been selling Indian stock markets since Christmas 2010 (as per our observation and updates). We have been advocating that decoupling is the only remedy for emerging economies, however it is not easy and we acknowledge not to do generalization and oversimplification for all that is to de-coupling. This type of reverse trend amongst domestic mutual funds is very encouraging. However as per another set of data, the numbers of mutual fund investors has seen a decline as well as the participation of retail investors. Read separate article below,

http://www.meghainvestments.com/2011/07/declined-participation-of-retail.html

However, the lay investors will ask, if the Indian mutual funds have bought such a hugely, then why Indian markets faced the year’s worst month that August was (after January of course) ?

Keep visiting us for more on decoupling and so on.