Less than 4% companies bagged 77% of FII flows since FY10..

Finance Textbooks tell you over and over again how opening of financial markets lead to resources going to the small and needy. The companies get listed  and how foreign capital helps these companies get access to capital and grow. Right. Wrong.

This analysis shows just about 4% of companies received nearly 80% of FII flows since 2010:

Largely, companies with high market capitalisation have benefited from the best years of foreign investor inflows into Indian equity markets. Through the past five years, about three of every four dollars invested by foreign investors in the Indian stock market were in a small number of companies that account for a major chunk of India’s market capitalisation.

In terms of numbers, these companies account for less than four per cent of the listed universe. This means about 96 per cent of listed companies have had limited access to foreign capital to fund growth.

A total of 5,665 companies are listed on the BSE. Of these, only 3.53 per cent (200 companies) account for the bulk of foreign flows. As much as 77 per cent of foreign flows through the past five years have been into the BSE-200, according to Securities’ May 2015 ‘Flowmeter: India Holdings & Flows’ report. It said non-banking financial companies, utilities and technology companies absorbed most of the capital. The concentration might be even higher, if one goes by astrategy report, authored by analysts Sanjeev Prasad, Sunita Baldawa and Akhilesh Tilotia. The report said 40 companies accounted for 74 per cent of equity portfolios in India.
We see similar things on macro stage too. Flows mostly go to rich countries and in developing to those who top the race..

 

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