In the wake of the Rs 5,600-crore scam at the National Spot Exchange (NSEL), institutional shareholders pared their stakes in flagship firms of the Financial Technologies group, the promoter of the troubled bourse.
During the quarter ended September, institutional stakeholders reduced their stakes in Financial Technologies India Ltd (FTIL) and Multi Commodity Exchange of India Ltd (MCX) by 14.5% and 6.4%, respectively, showed the latest data. The NSEL payment crisis emerged in early August after the spot exchange suspended trading on July 31. FTIL is the holding company of NSEL while MCX is the leading commodity derivatives exchange in which FTIL owns 26%.
In case of FTIL, both Foreign (FIIs) and domestic institutional shareholders (DIIs) have brought down their ownership in the September quarter by about 7% each. During the period, the total number of institutional shareholders fell to 81 from 156 at the end of the June quarter as nearly 46 FIIs and 26 mutual funds exited the stock. Prominent exits came from mutual funds with both Birla Sun Life and Reliance Capital selling out their 1.05% and 4.06% of stakes held at the end of the previous quarter. Among FIIs, Aracia Partners, Aracia Institutional Partners and FID Funds Mauritius have each squared their total exposure of about 4.2%.
Although MCX also witnessed some FII departures, the DIIs were more aggressive in exiting this counter. They brought down their ownership in the latest quarter by 4.8% to 15.22%, the data said. The noticeable exits came from the National Stock Exchange (NSE) and Reliance Capital, who parted with their stakes of 2.45% and 1.27% in the September quarter. While both Bank of India and Union Bank each sold their 1.03% of ownership, Corporation Bank reduced its stake by 0.71% to 2.24%. Even as foreign institutions like FID funds and Passport Capital LLC sold their entire stakes of about 5% each, the net FII holdings came down only by about 1.6% due to collective purchases of about 5% by BNP Paribas Arbitrage and Valiant Mauritius Partners Offshore among others.
Interestingly, amid the exodus of institutional investors when the share prices of FTIL and MCX plunged by 50% and 82% in that order, retail investors have increased their holding in both the companies. The total stake of individuals that hold share capital of up to Rs 1 lakh in FTIL has gone up from 8.4% in the quarter ending June to 17.8% in the three months to September.
