Overseas investors turned net sellers during the last two days after the US Fed signalled a potential rise in interest rates by 2023. There are expectations that the move could hit foreign fund inflows into India.
This makes a case to look for FII heavy stocks which may see volatility in case of an outflow. Foreign portfolio investors have sold shares worth around Rs 1,800 crore between June 17-18. However, they have bought shares worth Rs 2,76,700 crore since April 2020.
FIIs top holdings in BSE 500 index
Housing Development Finance Corporation (HDFC)
With a stake of 72.78%, the country’s largest mortgage lender HDFC is the most favourite pick of overseas investors. In fact, they increased their stake in the company in the March quarter from 71.95% and 70% for the quarter ended December 31, 2020 and September 30, 2020, respectively. Shares of HDFC have advanced 34% to Rs 2,487 during the past year till June 18.
Brokerage Anand Rathi Shares and Stock Brokers is positive on HDFC with a price target of Rs 3,100. “The company continues to grow strongly given its strong market position in the housing finance sector, healthy spreads, sturdy capital position, conservative provisioning and strength from its subsidiaries,” the brokerage said.
Zee Entertainment is the next on the list. FIIs had a 64.15% stake in the company as of March 31. They had 65.76% holding in the preceding quarter ended December 31. Shares of the company have gained 27% in the last year.
Edelweiss Securities has a ‘Buy’ rating on Zee Entertainment with a price target of Rs 357. “We expect the strong ad revival to play out in favour of Zee given its improving viewership across markets and new channels,” Edelweiss Securities said in a report.
Shriram Transport Finance Corporation (STFC)
Shares of the NBFC have more than doubled investors wealth during the past year. The scrip has jumped to Rs 1,380.80 on June 18 from Rs 649.48 on the same day last year. FII held a 61.01% stake in the company as of March 31. The company has recently informed the exchanges about fresh issuance of capital through equity shares and warrants worth Rs 500 crore by way of a preferential allotment to existing promoter Shriram Capital. Emkay Global Financial Services is bullish on STFC with a target price of Rs 1,680. “We are not incorporating the current issuance to our estimates as it has only nominal impact on growth and profitability. We will wait for more clarity over further capital raise.,” the brokerage said.
Shares of the company have gained 139% to Rs 3,221 in the past year. FII had a 54.51% stake in the company as of March 31. IIFL Securities has a ‘Buy’ call on Apollo Hospitals with a price target of Rs 3,940. Apollo Hospitals is an integrated healthcare provider, with services ranging from hospitals, retail pharmacies, health insurance and clinics, among others. The company is a pioneer in corporate hospitals and forms the largest chain in India with more than 10,200 beds across 71 hospitals.
Apollo Hospitals has completed the divestment of its front-end retail pharmacy business into Apollo Pharmacies. APL is a wholly-owned subsidiary of Apollo Medicals (AMPL), in which Apollo Hospitals owns a 25.5% stake. However, the back-end of the retail pharmacy business continues to be retained by Apollo Hospitals which would capture 85% of the cash flows and 80% of the EBITDA of the erstwhile pharmacy business (front-end + back-end).
“This structure has taken Apollo Hospitals one step closer to a potential unlocking of value in the pharmacy segment,” IIFL Securities said.
Overseas money managers increased their stake in Axis Bank to 51.43% in the March quarter from 51.02% in the preceding quarter ended December 31. Share of the private sector lender has gained 82% to Rs 736 during the past one year.
Othe major holdings
With a stake of 50.91%, IndusInd Bank is the next player on the list. Shares of the bank have gained nearly 100% during the past year.
ICICI Bank (47.78%), Kotak Mahindra Bank (44.23%), PVR (42.60%) and Redington (42%) are among other favourites of FIIs. Shares of these companies have also gained between 35%-230% in the last one year. Edelweiss Securities sees over 40% upside in PVR with a price target of Rs 2045.
“We expect cinemas to recover in line with new content and improving consumer sentiment and positive developments on vaccination drive are likely to instil confidence in producers as well. We remain positive on PVR’s long-term growth picture,” Edelweiss said.
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