Who owns most on India’s stock markets: 5 facts

Who owns most on India’s stock markets: 5 facts

Data as on 2014

Every quarter, all listed companies release the data on ownership of shares to stock exchanges. While it does not change significantly, a quarterly trend gives an insight.

Here are pointers that explain the ownership data:

1.     Foreign institutional investors: FIIs control a sizeable chunk of Indian shares. Their ownership of BSE 500, which accounts for over 90% of the stock market value, stands at 19.6% as of June 30, 2014. This is marginally below the 19.8% they owned in the quarter to March 2014, a record-high. Over the three months to June 2014, jumped by Rs 2,70,000 crore to Rs 16,74,000 crore. FIIs as a group were net buyers (more buying than selling) in sectors like public sector banks, real-estate shares, energy and distribution companies, telecom, healthcare and private banks, according to Credit Suisse estimates.

2.     Indian government: The ownership of India’s government of the BSE 500 index stands at 16% of the BSE 500 value. This is worth Rs 13,44,000 crore. This could perhaps be called the value of India’s sovereign wealth fund. This is a massive amount of wealth the government sits on in the context of deficits that it runs. To put things in perspective, the ownership of shares is nearly three times bigger than the fiscal deficit target set in the budget.

3.     Promoter holding: The promoter holding (other than the government) is at 36% for BSE 500. It has not changed significantly but the overall trend is towards consolidating control over businesses. A NSE study in the past revealed that in 10 years to 2011, company promoters hiked ownership in their companies. For a smaller NSE Nifty 50 group of companies, promoter holding rose to 46.8% from 26.4% in 10 years to 2011, according to the NSE study. This indicates confidence in own businesses or the need to defend their companies against hostile takeovers.

4.     Domestic institutions: In the past, domestic financial institutions like the erstwhile UTI, IDBI and LIC used to dominate corporate ownership. As of June 2014, LIC and domestic mutual funds own 11% or Rs 9,00,000 crore worth of shares. At present, very few people in India buy mutual funds. Credit Suisse expects the number of mutual funds investors to rise in India over the next few years. Effectively, the ownership of Indian companies will also show that change when it happens.

5.     Retail investors: Investing directly in the stock market is getting increasingly difficult for retail investors or individuals. As of June 2014, non-institutional or retail investors own 18% of BSE 500. The ownership of retail investors has halved over 10 years to 2011 in NSE 50 shares to 16%, according to the NSE study. This is largely because retail investors exited the stock market through buyback or open offers initiated by companies.

This work is produced by Simplus Information Services Pvt Ltd.

Happy Investing