Why is smart money chasing these three blue chip stocks?
The latest ownership report by Motilal Oswal Financial Services (MOFSL) reveals a clear shift in market dynamics, with domestic institutional investors (DIIs) now holding a larger stake in India's leading companies than foreign institutional investors (FIIs).
This changing balance of power has been steadily gaining momentum since 2021 as homegrown capital continued to flow into the market at a record pace.
DIIs – comprising mutual funds, insurance companies and pension funds – poured $19.7 billion into Indian equities in the previous quarter alone, leaving FIIs far behind with investments of just $5.4 billion.
While this highlights the growing dominance of domestic investors in shaping market trends, there are also instances in which the two have moved in tandem, raising their stakes in certain companies.
Here are three blue chip stocks that have recently seen such dual buying interest.
#1 Bajaj Finserv
A part of the Bajaj Group, the company offers financial services such as financing, insurance, broking and investing. It also distributes these on digital platforms through subsidiaries and joint ventures. It is also in the business of generating power through wind turbines, a renewable energy source.
Here's how DII and FII shareholdings increased in the June quarter.
In April, Bajaj Finserv's subsidiary Bajaj Finserv Asset Management Company (AMC) introduced two new passive funds — Bajaj Finserv Nifty 50 Index Fund and Bajaj Finserv Nifty Next 50 Index Fund.
These open-ended funds are designed to help investors grow their money over the long term by closely following the performance of their benchmark indices. They offer investors a low-cost, transparent, and efficient way to gain exposure to India's large-cap equity market. In June the company launched Bajaj Finserv Small Cap Fund, an open-ended equity scheme focused on small-cap stocks.
Bajaj Finserv has increased its customer target to 250 million in the next four years, chairman and managing director Sanjiv Bajaj told Reuters, betting on strong growth in the South Asian economy.
For more details, see the company fact sheet and quarterly results.
#2 Mazagon Dock Shipbuilders
Mazagon Dock Shipbuilders Limited (MDL) established in 1774, is a prominent shipyard in Mumbai. Initially a small dry dock, MDL has evolved into a renowned shipbuilding company.
The company is among India's leading shipbuilding yards, specialising in constructing and repairing warships and submarines for the ministry of defence and commercial enterprises.
It is the only Indian shipyard to have built destroyers and conventional submarines for the navy, among the first to have manufactured Veer and Khukri-class corvettes, and a lead builder of four Nilgiri-class stealth frigates. It is the only shipyard with Navratna status.
Here's how DII and FII shareholdings increased in the June quarter.
In June the company announced the proposed acquisition of a controlling stake in Colombo Dockyard PLC (CDPLC), Sri Lanka's largest and most well-established shipyard. The acquisition is valued at up to $52.96 million. This would mark the company's first international venture and represent a significant step in its evolution from a domestic shipbuilder into a regional maritime player with global ambitions.
The company now plans to increase production capacity for larger and more advanced military vessels.
For more details, see the company fact sheet and quarterly results.
#3 Waaree Energies
Waaree Energies is a leading solar module manufacturer with integrated capabilities across the energy transition value chain, spanning cells, inverters, batteries and green hydrogen.
It's an Indian manufacturer of solar PV modules with an aggregate installed capacity of 15 gigawatt (GW) as of 31 March, making it India's largest solar panel manufacturer.
Waaree has five manufacturing units across India, four in Gujarat (Surat, Tumb, Nandigram, and Chikhli) and one in Uttar Pradesh (Noida). It also has a nationwide network of more than 334 franchisees.
From March to June, FIIs increased their stake in the company from 0.7% to 2.7%, while DIIs raised their stake from 2.5% to 2.9%.
This could be because Waaree Solar Americas, a wholly owned subsidiary of Waaree Energies, received an order on 27 June for the supply of 540MW of solar modules – 270 MW to be delivered in 2025 and another 270 MW between 2027 and 2028.
The company's board also approved the acquisition of Kamath Transformers Pvt. Ltd. for ₹290 crore. The acquisition is part of Waaree Energies' business expansion and will be completed in the current fiscal year. It will acquire 100% shareholding in Kamath Transformers for a cash consideration.
In line with its growth strategy, the solar PV module manufacturer has also announced plans to expand its manufacturing presence in the US, particularly in Texas, aiming to increase capacity to 3 GW by FY26.
For more details, see the company fact sheet and quarterly results.
Conclusion
Dual buying by domestic and foreign institutions often signals strong confidence in a company's fundamentals, growth potential and resilience. However, it is not a guarantee of future returns. Though these stocks often provide stability and good long-term growth potential, they can still experience ups and downs in the short term.
It's important to look closely at a company's earnings potential, how it compares with others in the sector, and whether its stock price is reasonable, rather than blindly follow the moves of big investors. Investors should carefully evaluate these companies' fundamentals, corporate governance, and valuations as key factors before making an investment decision.
Happy investing!
Disclaimer:This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here.
This article was syndicated from Equitymaster.com.
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