PSU banks attract strong FII, DII interest as promoters reduce exposure: Motilal Oswal

Synopsis

Public Sector Undertaking banks are present favourites. Foreign Institutional Investors and Domestic Institutional Investors are showing accrued interest. FII stakes successful PSU companies roseate to 18.1% by March 2025. DII stakes besides deed a precocious of 18.8%. FIIs reduced vulnerability successful backstage companies. DII holdings successful backstage companies increased. BFSI is simply a cardinal assemblage for FIIs.

Public Sector Undertaking (PSU) banks person emerged arsenic the favourites of some Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs), according to a study by home brokerage steadfast Motilal Oswal.

FIIs person importantly ramped up their stakes successful PSU companies to 18.1% arsenic of March 2025, marking a crisp emergence of 140 ground points (bps) year-on-year (YoY) and 50 bps quarter-on-quarter (QoQ). The study underscores a striking divergence successful investor strategy arsenic DIIs besides accrued their involvement successful PSU companies to an all-time precocious of 18.8% successful March 2025, representing a summation of 120 bps YoY and 100 bps QoQ.

This surge successful PSU holdings comes arsenic FIIs simultaneously slashed their vulnerability successful backstage companies to a historical debased of 20.1%, down by 90 bps YoY and 30 bps QoQ. Meanwhile, DII holdings successful backstage companies surged to 18.7%, expanding by 180 bps YoY and 60 bps QoQ.

"Buoyant superior and secondary markets besides led to accrued involvement dilution by Promoter groups of Private companies. This resulted successful a dip successful their wide holdings successful the Nifty-500 to an all-time debased level of 47.5% (-110 bps YoY) successful March 2025," Motilal Oswal noted.

The study further added that Promoter holdings successful PSU companies besides dropped to 54.1% (-270 bps YoY and -140 bps QoQ) from 56.8% successful March 2024.

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In presumption of sectoral allocation, FIIs were importantly overweight successful the Banking, Financial Services, and Insurance (BFSI) sector, with the assemblage accounting for 34.4% of their holdings successful the Nifty-500 arsenic of March 2025, an summation of 280 bps YoY and 300 bps QoQ.

This was followed by technology, with a holding of 10% of FII allocations, and Telecom.

Meanwhile, DIIs were observed to beryllium overweight connected Consumer, Oil &Gas, and Metals, portion remaining underweight connected Private Banks, NBFCs, and Real Estate, arsenic per the brokerage report.

Within the Nifty-500, BFSI remained the largest allocation for DIIs, comprising 27.3% of full holdings, followed by Consumer astatine 9.8% and Technology astatine 9.3%.

(Disclaimer: Recommendations, suggestions, views and opinions fixed by the experts are their own. These bash not correspond the views of The Economic Times)

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