Tuesday, January 06, 2015

 FIIs’ favourites turn turtle on sell-off
[EditorI feel it is not true that the FIIs have increased their stake in Anant Raj Ltd and it is because of this factor, the scrip fell. In fact both the FIIs and DIIs have decreased their stake marginally in Anant Raj Ltd according to the latest shareholding pattern put up in the Bombay Stock Exchange website. It would not be an exaggeration to mention here that many of the companies where FIIs have actually increased their stake like Amara Raja Batteries, Aurobindo Pharma, Dr.Reddy's, Hathway Cable, Persistent System, LIC Housing Finance, Torrent Pharma, Zee Enterprise. etc. did not go for such massive selling as compared to Anant Raj Ltd nor are they trading near their 52-week low price. Moreover, the point to ponder is that, the stock of an A-group company cannot fall near its 52-week low price,  after coming up with such brilliant September, 2014 quarter numbers unless and until there is a foul play somewhere; which the regulator/s failed to detect till now. I again reiterate, there must be some game going on somewhere which the regulator/s could not detect till now, in case of Anant Raj Ltd. This is the most unfortunate part of regulation, of the Indian bourses. The Delhi-based firm Anant Raj Ltd has 11 hotels, out of which, 6 hotels are completed while 5 other hospitality projects are under construction. Anant Raj leases its commercial properties -- office, shopping malls and hospitality projects -- to obtain steady cash flows. It has also leased out some of its hotels to hospitality firms - Mapple Group and Royal Orchid. Among major projects, the company is developing a township spread over 160 acres in Gurgaon, with an expected sales realisation of Rs.5,900 crore over the next 3-5 years.]
January 6, 2015: It was a black Tuesday for Indian equities, as the country’s benchmark indices — Sensex and Nifty— nosedived over 3 per cent in trade. The sell-off was broad-based with 474 stocks out of the CNX 500 Index declining. Two-third of the stocks that fell were those in which FII holding (as of September 2014) was higher than the year-ago period.

Realty worst hit
Among those that fell the most were real estate stocks, which were FII favourites in 2014. DB Realty plummeted 8.7 per cent. Foreign institutions had upped their stake in this company from 5.79 per cent in September 2013 to 9.11 per cent as of September 2014.

Likewise, the stock of Indiabulls Real Estate, which saw buying interest from FIIs in 2014, fell over 7 per cent. As of September 2014, foreign institutions held 28.93 per cent stake in the company, 3.2 percentage points more than in September 2013. 

Other realty stocks which were bought by FIIs in 2014 and figured prominently in the losers’ list include HDIL and Anant Raj Industries. Both stocks lost in excess of 6 per cent on Tuesday.

There were big losers in other sectors, too. The stock of garment manufacturer Arvind, in which FIIs had raised stake to 23.5 per cent by end-September 2014, from 15.7 per cent in September 2013, lost 6.7 per cent.

Likewise, the stock of J Kumar Infra Projects, wherein the FII holding almost trebled to 17.9 per cent as of September 2014 from 6.17 per cent in September 2013, lost 6.5 per cent.

Other FII-favoured stocks that gave up gains include BF Utilities (6.6 per cent), Tata Sponge Iron (6.2 per cent), Hotel Leela Ventures (6 per cent) and Bharat Forge (5.7 per cent).

Vulnerable to trends
The free fall in crude oil and subsequent strain on oil-based economies not only poses a risk to incremental FII flows into India but can also trigger profit-booking by foreign institutions. The stocks of companies that are heavily owned by FIIs may be more vulnerable to negative global developments.

Which are they? HDFC tops the list; FIIs held 77.85 per cent in the company as of September 2014. FIIs owned more than half of Zee Entertainment’s equity. Other companies in which FIIs had more than 45 per cent of the total equity include Shriram Transport, IDFC, Hubtown, Axis Bank, United Phosphorous, YES Bank and KPIT Technologies.

CourtesyThe Hindu Business Line
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