Foreign Portfolio Investors (FPIs) have been among the largest non-promoter shareholders in Indian stocks for a long time. While markets witnessed consistent inflows, with a 6.4 per cent ownership (by number of shares) in all-NSE listed companies, FPIs' possession has largely remained stable over the years.
It is difficult to build a strong case of optimism about the general elections driving FPIs' investments as they tend to be very quality focussed. Data sourced from Prime Database reveals that during the last elections when the model code of conduct came into force in March 2014, FPI investments in all NSE-listed companies increased to 963 from 953 in the previous quarter. Their ownership (in value terms) inched up from 19.5 per cent to 19.7 per cent during the period. However, this year, in the March 2019 quarter, when the election schedule was announced, FPIs invested in 1,181 NSE-listed companies, down from 1,197 in December 2018 quarter. Their stakes (in value terms) marginally reduced to 6.42 per cent from 6.47 per cent during the period.