At times following FIIs can be fruitful as FII holding went up from 5.37 per cent to 18.27 per cent in Amtek India stock and it has resulted in an appreciation of 162 per cent rise in price of the stock. However one need not follow them blindly as a number of stocks have gone down also post their purchase. Classic examples are Voltamp and HDFC.
While FII holding in Voltamp rose by 8.22 per cent from 24.13 per cent in June 2011 to 32.35 per cent in March 2012, the price fell by 8.34 per cent from Rs 563 to Rs 516. In HDFC, FIIs ramped up their holding by 8.12 per cent from 59.12 per cent to 66.24 per cent while the stock fell by 4.6 per cent from Rs 706 to Rs 673.
At the extreme end of the price fall where FIIs have raised holding are KGN Industries and Manappuram Finance. KGN Industries and Manappuram Finance declined 77 per cent and 54 per cent, respectively, during 2011-12.
Thus seeing above examples one has to be very careful following the FIIs purchase as blindly following their purchases can be detrimental to your financial health.