If you needed a reminder of who actually rules the Indian stock markets, yesterday’s sale of 78.3 crore shares of National Thermal Power Corporation (NTPC) was as good as any.
Nearly all the shares were bought by institutions and foreign investors, including banks and mutual funds, and very little by ordinary investors.
According to the data released by the government, only about 8% of the total shares were bought by clients of brokerages in India – the category that includes ordinary Indian investors.
Everything else, 92%, went to institutional buyers, in a demonstration of who rules the Indian stock markets.
The split up of allocation in NTPC’s offer for sale reveals that foreign institutional investors or FIIs – a category that includes hedge funds and other investment vehicles based outside India – got the biggest chunk. FIIs got 45% of the overall allocation.
Perhaps indicating strong buy by LIC, Insurance companies in India were the second biggest buyers of NTPC shares in the offer – accounting for 25% of the total.
They were followed by Indian banks, at 11%, and Mutual Funds, who bought about 8.4%. Interestingly, brokers bought about 2% of the shares, or about 15.6 lakh shares worth Rs 227 crore, for their own use.
In all, the government got about Rs 11,500 crore the sale, which saw its stake come down to about 75% in the power company. There was 70% more demand than there were shares available.
The sale shows the clout of institutions and organized sellers and buyers in the Indian stock markets. The role of individual investors has come down sharply in the last ten years as foreign funds have more or less determined the broad direction of the markets.