MFs square off their entire holding in Financial Technologies

Several schemes of large fund houses - Reliance, Birla and SBI AMCs had exposure to the counter

Investors, who have exposure in stock markets through mutual funds, may have taken a hard hit in Financial Technologies (FT) last month. FT is one of the largest promoters in crisis hit National Spot Exchange Limited (NSEL).

Several schemes of India's large fund houses had exposure to FT till July, 2013. However, ever since the NSEL crisis surfaced in late July shares of FT crashed over 80%. On the first trading day of August, the counter cracked a whopping 65% to Rs 191.75 against the previous close of Rs 541.55.

This steep decline did not stop there and the counter plunged all the way down to Rs 102.05 later in August.

Equity schemes of big fund houses like Reliance, Birla Sun Life and SBI had exposures to the tumbling counter. Schemes like Reliance Growth and Reliance Equity from the stable of Reliance Mutual Fund had invested 1.8% to as high as 2.6% of their assets under management (AUM) in Financial Technologies, which is about Rs 120 crore of investors' money.

SBI Mutual Fund too had fairly large exposure to the crisis-hit counter. For instance, its SBI Arbitrage Opportunities scheme pumped in 2.86% of its assets in FT as on 31 July, 2013.

Birla Sun Life Mutual Fund had exposures in FT through various schemes. For instance, its Frontline Equity scheme pumped Rs 28.6 crore or 0.89% on the counter while its Special Situations scheme had 1.84% exposure to FT.

India's equity fund managers rushed to square off their entire holdings in Financial Technologies. No matter, how fast they had been to react to the news, they may not have been able to restrict losses to a large extent as the one-day fall was too steep for many to take a decisive call.

FT, promoted by Jignesh Shah, is one of the main promoters of NSEL, an exchange dealing in commodities. Shares of FT crashed in August and hit 52-week low of Rs 102.05 - a fall of over 80% during the month. This was beyond one's imagination. But it appears fund managers lacked vision and could not see the coming carnage despite the counter becoming less than half in a matter of 9 months.

It was in November last year that stock of Financial Technologies was trading at their 52-week high at Rs 1,123. On 31 July, 2013 the counter had last traded at Rs 541.55.

The counter, which surged yet again in the first fortnight of September, closed weak on Friday at Rs 199.20, down Rs 18.2 or 8.37% on BSE.