Foreign Investors Cut Holding In 123 Indian Stocks In Second Quarter

Foreign investors turned net sellers in the quarter ended September despite two consecutive months of positive inflows, weighed down by a weaker rupee, rising prices of Brent crude and U.S.-China trade tensions.

Investors trimmed their holding by over half a percentage point in 123 stocks—or nearly a quarter of the 501 stocks on the S&P BSE 500 Index.

The biggest casualty was India’s largest telecom servicer provider Vodafone Idea Ltd., in which foreign portfolio investors reduced their holding by over 13.5 percent.

However, they continued to invest in select Indian stocks as they increased their exposure by over half a percentage point in 93 of the 501 stocks on the S&P BSE 500. Foreign investors increased their stake in AU Small Finance Bank Ltd by nearly 10 percent—the highest among Indian stocks.

Here are the top five stocks that investors bought the most in the September-ended quarter.

What’s Working For:

AU Small Finance Bank Ltd.

The lender grew at a compounded annual growth rate of 42 percent over the last two years, led by increased penetration and market share. Under-penetrated markets, customer-focused business and the capability to build after its expansion plan provides it growth opportunities.

Zensar Technologies Ltd.

The software services focused on its core services (applications and information management services) and has strong momentum in digital segment that contributes 43 percent of its revenue. Its growth driver for the fiscal will be large deals wins—the firm won three deals valued over $50m in the quarter ended June—and revival in IMS business.

Mahanagar Gas Ltd.

The gas distribution company holds infrastructure exclusivity in Mumbai, Thane, and Raigad districts. In the last one year, the company has hiked CNG and PNG prices thrice, helping it maintain margins. Low penetration of natural (approximately 30 percent in Maharashtra) offers huge growth potential, according to a Kotak Securities report. Despite being India’s most profitable listed city gas distribution company, it trades at a steep discount to its peers. It offers the highest upside for investors.

Tejas Networks Ltd.

The optical network equipment maker is set to capitalise on the exponential growth in data traffic in India due to its strong portfolio of optical/data networking products and an asset-light business model. The preference it gets in government and public sector orders due to the Make In India scheme gives it an edge over global peers.

Greaves Cotton Ltd.

Continued focus on cost rationalisation, strategic planning and segments such as aftermarket sales (including multi-brand spares and Greaves Care business) will provide much needed growth uptick to the heavy equipment maker. Its acquisition of the electric-vehicle maker Ampere could boost its share in the non-auto segment and B2C business.