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Equity Research INDIA August 2, 2017 CNX Nifty: 10082 Strategy
ICICI Securities Limited is the author and MFs could continue to outpace FII inflows distributor of this report MF flows surge in Q1FY18: FPI flows at US$1.8bn moderated QoQ (US$6.7bn in Q4FY17) although MF flows surged to US$4.6bn (US$1.4bn in Q4FY17). Consequently, FPI and DII holdings in the Nifty50 index improved by 30bps each to 29.1% and 14.1% respectively. Large institutional activity was observed in stocks impacted by changes in the Nifty composition (Vedanta inclusion) and big ticket QIP. Change in Nifty 50 composition impacts FPIs sectoral OW/UW stance: With the
inclusion of Vedanta in Nifty 50 Index, FPIs turned underweight (UW) in Metals. Likewise, with the exclusion of Grasim Industries, FPIs turned overweight (OW) in Cement. FPIs OW on growth while MFs OW on value: As a theme, FPIs are predominantly overweight on growth - Retail finance (Private retail banks & NBFC’s) Auto, Media and select Industrials (Materials, Telecom, Cement and Real Estate) - with Pharma being on the value side. On the other hand, MFs prefer value with their overweight stance on Industrials, PSU banks, Pharma, Private corporate banks, Metals and Utilities while growth overlap is seen in Auto. Outlook for flows and implications: Domestic flows are expected to continue at a robust pace given the recent outperformance of equities as compared to other asset classes available for Indian households (Real estate, Gold and Fixed deposits). For EMs, the outlook for FPI flows is mixed as positive cues emerging from China’s better than expected Q2 GDP growth (6.9%) and firming metal prices are clouded by risks from the imminent US Fed balance sheet reduction program and tapering program of the ECB. In the event of volatility in FPI flows, expensive growth stocks with high beta could underperform. MF net buying spread across most sectors in Q1FY18 : During Q1FY18, incremental net buying by FPIs was observed in PSU banks, Private retail banks, Metals, Energy , Auto and Telecom although MFs net buying was observed across all sectors with the top five bought sectors being Metals, Private retail banks, PSU banks, NBFC’s and Utilities.
Q1FY18 institutional flows into BSE 100 stocks – Key takeaways: FPIs buying/selling momentum: In two successive quarters, FPIs have increased holding in Britannia, Kotak Mahindra Bank, Vedanta, Reliance Infra, while they decreased holdings in Divi’s Lab, Aurobindo, Lupin, Tata Chemicals. Reversal in FPIs buying/selling momentum: FPIs buying momentum reversed in Bharti Infratel, Tata Power, DLF, ONGC, while selling momentum reversed in DRL, Tata Motors (DVR), Eicher motors, Canara Bank, PNB FPIs - Top 5 ‘buys’ and ‘sells’ in Q4FY17: FPIs top 5 ‘buys’ are: SBI, Kotak Mahindra Bank, Vedanta, Reliance Industries, and Maruti Suzuki; and top 5 ‘sells’ are TCS, Petronet LNG, Sun Pharma, Infosys, and Dabur FPIs sold IT and Pharma and bought Private retail & PSU Banks: FPIs sold IT and Pharma in Q1FY18. During the same period, FPIs bought into Private Banks with retail focus, PSU Banks, Metals, Energy and Auto stocks. FPIs Vs MFs – Divergence stance in sectors and stocks: Research Analysts: - Sectors: (a) FPIs (OW) & MFs (UW) - NBFC, Private Retail Bank, Telecom, Vinod Karki Cement and Media; and (b) FPIs (UW) & MFs (OW) – PSU Bank, Industrials, [email protected] and Metals. +91 22 6637 7586 Siddharth Gupta - Stocks: (a) FPIs (OW) & MFs (UW) – HDFC, HDFC Bank, Kotak Mahindra [email protected] Bank, Bharti Infratel, and Indiabulls Housing Finance; and (b) FPIs (UW) & +91 22 2277 7607 MFs (OW) – SBI, L&T, Tata Steel, and Aurobindo Pharma.
Please refer to important disclosures at the end of this report
Strategy, August 2, 2017 ICICI Securities
Positive flows buoy equity markets Chart 1: MFs outpace FII flows Chart 2: Q1 FPI flows to India in line with EMs
6 FPI equity flow MF equity flow 1.2 1.0 5 0.8 0.6 4 0.4 0.2 3 0.0 (0.2)
2 bn) (US$ (0.4)
( ( US$bn) (0.6) 1 (0.8) (1.0)
0 India
(1) Brazil
Turkey
Taiwan
Thailand
Indonesia
Phillipines
South South Korea
Jul-17
Apr-17
Jan-17 Jun-17
Feb-17 Mar-17 May-17 Source: I-Sec research, Bloomberg Source: I-Sec research, Bloomberg Chart 3: Retail participation continues… Chart 4: …mainly fueled by strong SIP contribution
Retail participation through MF schemes incl ELSS (USD bn) 50 SIP contribution (Rs bn) MF deployment in markets (USD bn) 45 2.5
2.0 40
1.5 35
1.0 30 0.5 25 - 20
(0.5)
Jul’ 16 Jul’
Oct’ 16 Oct’
Jun' 17 Jun' May'17
Jan’ 17 Jan’
April'17
Feb’ 17 Feb’ 17 Mar’
Aug’ 16 Aug’ Sep’ 16 Sep’ 16 Nov’ 16 Dec’
Oct-16 Apr-17
Jun-16 Jun-17
Feb-17 Dec-16 Aug-16 Source: I-Sec research, AMFI Source: I-Sec research, Bloomberg Chart 5: Q1FY18 sectoral indices performance
25% Sectoral performance 20% 15% 10% 5% 0% -5%
-10%
IT
Nifty Infra
Auto
Metal
Media
Realty Power
FMCG
Energy
Sensex
Pharma
Finance
Telecom
Bank Index Bank
PSU Banks PSU
BSE Mid-cap BSE BSE500 IndexBSE500 Cons. Cons. durables Source: I-Sec research
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Strategy, August 2, 2017 ICICI Securities
FPI flows into Indian Equities in Q1FY18 – A holistic view
1. FPIs stake in Nifty 50 increases by 30 bps QoQ
FPIs stake in Nifty 50 Index increased to 29.1% in Q1FY18 (28.8% in Q4FY17).
Chart 6: FPI ownership at 29%
30.0 FPI Nifty ownership
29.6
29.2
28.8
28.4
Jun-15 Jun-16 Jun-17
Mar-16 Mar-17
Sep-15 Dec-15 Sep-16 Dec-16
Source: I-Sec research, C-line
2. FPIs OW/ UW stock stance relative to Nifty 50:
As at end Q1FY18, relative to Nifty 50, FPIs’ top 5 ‘OW’ Nifty 50 stocks are: HDFC, Kotak Mahindra Bank, HDFC Bank, Axis Bank and Bharti Infratel. Their top 5 ‘UW’ Nifty 50 stocks are: ITC, L&T, SBI, RIL and ONGC.
Table 1: FPIs: Top UWs (ITC, L&T) and OWs (HDFC, Kotak Mahindra Bank and HDFC Bank) Stocks FPI OW Stocks FPI UW H D F C 1.4% ITC -3.8% Kotak Mahindra Bank 0.5% Larsen & Toubro -2.6% HDFC Bank 0.4% SBI -1.6% Axis Bank 0.4% Reliance Inds. -1.3% Bharti Infra. 0.3% O N G C -0.8% Indiabulls Hous. 0.3% Hind. Unilever -0.7% Tata Motors 0.2% Tata Steel -0.6% Zee Entertainment 0.2% Sun Pharma -0.6% Eicher Motors 0.0% Asian Paints -0.6% Hero Motocorp 0.0% NTPC -0.5% Source: I-Sec research, C-line
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Strategy, August 2, 2017 ICICI Securities
3. FPIs – Sectoral stance relative to Nifty50:
Overweight (OW): NBFC, Materials, Private Retail Bank, Telecom and Pharma
Underweight (UW): Energy, PSU Banks, Consumer Staples, Industrials and IT.
Chart 7: FPIs’ OW and UW position
5% FII OW/UW 4% 3% 2% 1% 0% -1% -2% -3%
-4%
IT
Auto
Media NBFC
Metals
Energy
Utilities
Cement Pharma
Telecom
Materials
Industrials Disc Cons
PSU banks PSU
Real estate Real
Pvt Corp Bk Corp Pvt
Pvt Retail Bk Retail Pvt Cons Staples Cons
Source: I-Sec research, C-line
Chart 8: FPI holdings – by sector
16% FPI Sector weight 14% 12% 10% 8% 6% 4% 2%
0%
IT
Auto
NBFC Media
Metals
Energy
Utilities
Pharma Cement
Telecom
Materials
Industrials
PSU banks PSU
Real estate Real
Pvt Retail Bk Retail Pvt
Consumer Disc Consumer
Pvt Corporate Bk Corporate Pvt Consumer Staples Consumer
Source: I-Sec research, C-line
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4. Nifty50 constituents change impact FPIs sectoral stance Changes in FPIs sectoral over-weight and under-weight position can be attributed to: (a) incremental equity flows into the sector relative to its Nifty 50 sectoral weightage, (b) price movement during Q1FY18, and (c) changes in Nifty 50 composition
Effective 22 May‘17, Vedanta replaced Grasim Industries in the Nifty50 Index. With the inclusion of Vedanta in Nifty 50 Index, FPIs turned UW in Metals. Likewise, with the exclusion of Grasim Industries, FPIs turned OW in Cement
Table 2: Nifty 50 constituent changes… Table 3: … led to change in Nifty 50 sectoral weightage Particulars Outgoing Incoming weight Particulars Q4FY17 Q1FY18 weight Incoming Cement 3.07 2.02 Vedanta Ltd 1.29 Metals 1.67 3.08
Outgoing Grasim Industries 0.99
Source: I-Sec research Source: I-Sec research
5. FPIs buying/selling momentum during two successive quarters ‘Top 5’ stocks where FPI holding increased: Britannia, Kotak Mahindra Bank, Vedanta, Reliance Infra.
‘Top 5’ stocks where FPI holding decreased: Divi’s Lab, Aurobindo Pharma, Lupin, Tata Chemicals.
Reversal in FPI buying momentum: FPIs’ buying momentum over Q3FY17 and Q4FY17 reversed in Q1FY18 in Bharti Infratel, Tata Power, DLF, ONGC
Reversal in FPI selling momentum: FPIs’ selling momentum over Q3FY17 and Q4FY17 reversed in Q1FY18 in DRL, Tata Motors (DVR), Eicher motors, Canara Bank, PNB
Table 4: Top companies where FPI holding Table 5: Top companies where FPI holding increased over past two quarters decreased over past two quarters Company name 201612 201703 201706 Company name 201612 201703 201706 Britannia Inds. 17.40 19.78 22.50 Divi's Lab. 20.34 18.03 14.57 Kotak Mah. Bank 44.77 46.51 48.11 Aurobindo Pharma 24.5 21.41 20.15 Vedanta 18.17 20.51 21.42 Lupin 34.03 32.58 31.31 Reliance Infra. 21.67 23.12 24.61 Tata Chemicals 18.56 17.4 16.09 Cipla 24.36 25.43 26.87 Infosys 56.87 55.52 54.84 Exide Inds. 13.27 14.01 14.97 Asian Paints 19.38 18.07 17.47 Titan Company 20.16 21.13 21.64 Tata Motors 43.12 42.26 41.33 Reliance Inds. 24.73 25.32 26.16 Idea Cellular 47.72 46.9 45.94
Source: I-Sec research, C-line Source: I-Sec research, C-line Table 6: Decline in FPI holding after rising for two Table 7: Increase in FPI holding after decreasing quarters for two quarters Company name 201609 201612 201703 201706 Company name 201609 201612 201703 201706 Bharti Infra. 25.3 25.9 35.4 35.1 Dr Reddy's Labs 55.4 52.9 48.8 49.0 Tata Power Co. 26.2 26.6 27.5 26.4 Tata Motors-DVR 58.2 57.1 55.9 58.4 DLF 17.2 17.6 18.3 17.4 Eicher Motors 34.4 33.7 32.5 32.9 O N G C 5.4 5.8 6.4 6.0 Canara Bank 6.6 6.1 5.5 6.0
Punjab Natl.Bank 11.1 10.4 10.0 10.4
Source: I-Sec research, C-line Source: I-Sec research, C-line
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6. FPIs bought equities worth US$ 1.8bn in Q1FY18
FPIs top-5 ‘buys’ and ‘sells’ FPIs were net buyers to the tune of US$ 1.8bn in Q4FY17 (bought US$ 6.7bn in Q4FY17). Their top-5 ‘buys’ were SBI, Kotak Mahindra Bank, Vedanta, Reliance Industries, and Maruti Suzuki. In the top-5 ‘sell’ list are TCS, Petronet LNG, Sun Pharma, Infosys, and Dabur.
Chart 9: FPIs: Top-5 - ‘buys’ and ‘sells’ Table 8: Stock performance of FPIs’ top ‘buys’ and ‘sells’
Top 5 Stocks bought & sold ($mn) Top ‘sells; Q1FY18 Top ‘buys’ Q1FY18 perf. perf. St Bk of India Maruti TCS -2% 20% Kotak Mah. Bank Suzuki Vedanta Sun Pharma -19% RIL 4% Reliance Inds. Infosys -7% Vedanta -3% Maruti Suzuki Kotak Dabur India Petronet LNG 7% Mahindra 10% Infosys Bank Sun Pharma.Inds. Dabur India 5% SBI -6%
Petronet LNG TCS (500) 0 500 1,000
Source: I-Sec research, C-line Source: I-Sec research, C-line
7. Five stocks constitute 32% of FPIs’ portfolio:
FPIs holds a concentrated portfolio in India with five stocks (HDFC Bank, HDFC, Infosys, RIL and Kotak Mahindra Bank) constituting more than 30% of their holding in BSE 100.
Chart 10: More than 30% of FPI holding is in five stocks
35 Mar-17 Jun-17 30
US$ bn US$ 25
20
15
10
5
0
ITC
TCS
Inds.
Infosys
H D F F C D H
Bank
Reliance
Axis Bank Axis
Kotak Mah. Kotak
HDFC Bank HDFC Tata Motors Tata
Maruti Suzuki Maruti Source: I-Sec research, C-line
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Strategy, August 2, 2017 ICICI Securities
8. Private retail banks and PSU banks saw massive FPI inflows in Q1FY18
Buying in OW sectors: Private retail bank (US$925mn)
Selling in OW sectors: Pharma (US$494mn)
Buying in UW sectors: PSU banks (US$1059mn), Metals (US$625mn) and Energy (US$554mn)
Selling in UW sectors: IT (US$794mn)
Selling in EW sectors: Private corporate banks (US$200mn)
Chart 11: QoQ FPI flows
Sectors bought/sold ($mn) IT Pharma Pvt Corporate Bk Utilities Media Industrials Cement Consumer Disc Real estate Materials Consumer Staples NBFC Telecom Auto Energy Metals Pvt Retail Bk PSU banks -1,000 -500 0 500 1,000
Source: I-Sec research, C-line
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Strategy, August 2, 2017 ICICI Securities
Mutual Funds (MFs) flow in Q1FY18 – A holistic view
During Q4 FY17, MFs were net buyers to the tune of US$ 4.6 bn (compared to US$ 1.4 bn buying in Q4FY17). A. MFs’ top-5 ‘buys’ and ‘sells’
MFs top-5 ‘buys’ were SBI, Vedanta, HDFC, HDFC Bank and Kotak Mahindra Bank. In their top-5 ‘sell’ list are RIL, Coal India, Wipro, Maruti Suzuki, and TVS Motors.
Chart 12: MFs: Top-5 ‘buys’ and ‘sells’ Table 9: Stock performance of MFs’ top ‘buys’ and ‘sells’
Top 5 Stocks bought & sold Top ‘sells’ Q1FY18 perf. Top ‘buys’ Q1FY18 perf. St Bk of India (US$mn) Vedanta Kotak H D F C RIL 4% Mahindra 10% Bank HDFC Bank Kotak Mah. Bank Coal India -17% HDFC Bank 15% TVS Motor Co. Maruti Suzuki Wipro 0% HDFC 8% Wipro Coal India Maruti Suzuki 20% Vedanta -3% Reliance Inds. (250) - 250 500 TVS Motor Co. 27% SBI -6%
Source: I-Sec research, C-line Source: I-Sec research, Bloomberg
B. Five stocks constitute ~26% of MFs portfolio
Similar to FPIs, MFs also hold a concentrated portfolio with five stocks (HDFC Bank, SBI, L&T, Infosys and ITC) constituting ~26% of their holding in BSE 100.
Chart 13: 26% of MFs holding in five stocks
6 Jun-17 Mar-17
5 US$ bn US$ 4
3
2
1
0
ITC
India
Maruti
Suzuki
Inds.
Bank
Infosys
St Bk of Bk St
Toubro
H D F F C D H
Bank
IndusInd
Reliance
Larsen & Larsen Kotak Mah. Kotak HDFC Bank HDFC Source: I-Sec research, C-line
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C. MFs OW/ UW stock stance relative to Nifty 50
As at Q1FY18-end, relative to Nifty 50, MFs’ top-5 OW stocks are: SBI, Aurobindo Pharma, Tata Steel, Bank of Baroda and Tata Motors DVR. Their top-5 UW stocks are: HDFC, RIL, ITC, TCS and HUL.
Table 10: MFs: Top UWs and OWs Stocks MF ‘OW’ Stocks MF ‘UW’ SBI 2.3% HDFC -4.6% Aurobindo Pharma 0.6% Reliance Inds. -3.9% Tata Steel 0.6% ITC -3.6% Larsen & Toubro 0.5% TCS -2.7% Bank of Baroda 0.5% Hind. Unilever -1.2% Tata Motors-DVR 0.5% HDFC Bank -1.1% GAIL (India) 0.5% Asian Paints -0.9% Maruti Suzuki 0.4% Infosys -0.9% IndusInd Bank 0.4% Indiabulls Housing finance -0.7% Source: I-Sec research, C-line
D. MFs’ sector weights
MFs’ highly owned sectors are: Banks, Auto, Energy, Industrials and IT.
Chart 14: MFs’ sector weights
14.0% MF sector weight 12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
IT
Auto
Bk
NBFC
Metals
Energy
Utilities
Pharma Cement
Pvt Retail Pvt
PSU bank PSU
Industrials Cons Stap Cons
Pvt Corp Bk Corp Pvt Source: I-Sec research, C-line
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Strategy, August 2, 2017 ICICI Securities
E. MFs’ sectoral stance relative to Nifty 50
Overweight (OW): Industrials, PSU Banks, Pharma, Materials, Auto, Private corporate bank, and Metals.
Underweight (UW): IT, Consumer Staples, Energy, NBFCs, Private retail bank and Telecom
Chart 15: MFs’ sector stance
4.0% MF OW/UW 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0%
-4.0%
IT
Auto
NBFC
Media
Metals
Energy
Utilities
Cement Pharma
Telecom
Materials
Industrials
Cons. Disc Cons.
PSU banks PSU
Real estate Real
Pvt Corp. Bk Corp. Pvt Pvt Retail Bk Retail Pvt
Cons. Staples Cons. Source: I-Sec research, C-line
F. MFs’ sectoral equity buying/selling
Buying in OW sectors: PSU Banks (US$464mn), Metals (US$697mn),
Selling in UW sectors: Consumer Discretionary (US$14mn)
Buying in UW sectors: Private Retail Bank (US$632mn), NBFC (US$415mn)
Chart 16: MF QoQ flows
Sectors bought/sold ($ mn)
Consumer Disc Real estate Cement Energy Materials Telecom Media IT Auto Industrials Consumer Staples Pvt Corporate Bk Pharma Utilities NBFC PSU banks Pvt Retail Bk Metals (50) 50 150 250 350 450 550 650
Source: I-Sec research, C-line
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Strategy, August 2, 2017 ICICI Securities
G. FPIs vs MFs – divergence and similarity in stance in sectors and stocks
a) Divergent sectoral stance
FPI (OW) and MF (UW): NBFC, Private Retail Bank, Telecom, Cement and Media
MF (OW) and FPI (UW): PSU Bank, Industrials, and Metals
Chart 17: FPIs vs MFs: Divergent sectoral view
MF OW/UW FPI OW/UW
NBFC Pvt Retail Bk Telecom Cement Media Consumer Disc Utilities Metals Industrials PSU banks
-3% -2% -1% 0% 1% 2% 3% 4% 5%
Source: I-sec research, C-line
b) Similar sectoral stance
FPIs and MFs (OW): Pharma, Private Corporate Bank, Auto, Materials and Real Estate.
FPIs and MFs (UW): IT, Consumer Staples, and Energy
Chart 18: FPIs vs MFs: Similar sectoral views
MF OW/UW FPI OW/UW
IT
Consumer Staples
Energy
Real estate
Materials
Auto
Pvt Corporate Bk
Pharma
-4% -3% -2% -1% 0% 1% 2%
Source: I-sec research, C-line
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Strategy, August 2, 2017 ICICI Securities
c) Divergent stock stance
Table 11: FPIs vs MFs: Different stock views Name FPI OW/UW MF OW/UW HDFC 1.4% -4.7% HDFC Bank 0.4% -1.0% Kotak Mahindra Bank 0.5% -0.6% Bharti Infra. 0.3% -0.6% Indiabulls Hous. 0.3% -0.7% Aurobindo Pharma -0.2% 0.7% Tata Steel -0.6% 0.6% Larsen & Toubro -1.8% 0.4% St Bk of India -1.7% 2.4% Source: I-sec research, C-line
d) Similar stock stance
Table 12: FPIs vs MFs: Similar stock views Name FPI OW/UW MF OW/UW Infosys -0.1% -0.9% Bajaj Auto -0.5% -0.7% O N G C -0.8% -0.4% Asian Paints -0.6% -0.9% Hind. Unilever -0.8% -1.2% TCS -0.3% -2.7% Reliance Industries -1.3% -4.0% ITC -3.8% -3.6% Source: I-sec research, C-line
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Annexure 1: Ownership structure of Indian market
Table 13: Nifty 50 Nifty 50 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Promoter 44.4 44.2 44.0 44.1 43.7 43.1 DII 13..2 13.2 13.3 13.9 13.8 14.1 FPI+ADR+GDR 29.4 29.8 29.8 29.1 28.8 29.1 Public 12.9 12.8 12.9 12.9 13.6 13.7 Source: I-Sec research, C-line
Annexure 2: Definitions and measurements
Ownership stake: FPIs ownership in Nifty 50 / BSE 100 is calculated by aggregating the stake of FPIs in each of the Nifty 50 / BSE 100 stocks and dividing it by the total market capitalisation of Nifty 50 / BSE 100. Sector weights: For instance, the FPIs sectoral weight in IT is calculated by aggregating FPIs holding in each IT stock in BSE 100 and dividing it by total FPIs holding in BSE 100. Overweight (OW) and Underweight (UW): The sectoral OW / UW is calculated relative to Nifty 50 sectoral weights. For instance, the FPIs OW in IT is calculated by taking the difference between FPIs sector weights in IT and IT sector weight in Nifty 50. Equity flow / buying & selling: Difference in quarterly shareholding is multiplied with the average market capitalisation. FPIs’ holding calculation: In calculating FPIs holding, we have included ADRs and GDRs, which to an extent are also held by non-FPIs. Since FPIs and non- FPIs break up of ADR/GDR holding is unavailable, we have assumed that all ADR/GDR are held by FPIs. Hence, our analysis may show a higher FPIs weight in stocks with high ADR/GDR component. We have also included FDI, and NRI into our FPIs stake calculation. Since our FPI calculation is based on average prices and average exchange rate, the FPI equity flow numbers may not match with aggregate FPI equity flow data as disclosed on SEBI/NSDL websites.
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New I-Sec investment ratings (all ratings based on absolute return; All ratings and target price refers to 12-month performance horizon, unless mentioned otherwise) BUY: >15% return; ADD: 5% to 15% return; HOLD: Negative 5% to Positive 5% return; REDUCE: Negative 5% to Negative 15% return; SELL: < negative 15% return
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Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Vinod Karki, MMS (Finance); Siddharth Gupta, (CA); Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. 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