Street signs: Equity MFs cut exposure, IPO grey market activity, and more

Equity MFs cut exposure to banking
 

Domestic mutual fund (MF) managers are pruning their exposure to the banking sector, especially private sector banks. Many believe prospects may not be as strong as some have forecast. “We have been cutting our exposure to some private sector banks, where valuations had not corrected despite the market fall,” said a fund manager. A third of equity MFs' ~8.3 trillion assets are invested in banking stocks. Some fund managers said they prefer moving to cash until there is a clarity on growth. Over the past month, the Nifty has slipped 8 per cent, while the Bank Nifty is down 10 per cent.

                                                                                               Hamsini Karthik
 

Companies query on buyback price  

A handful of companies have written to the Securities and Exchange Board of India (Sebi) on whether they can change their share buyback price following the introduction of the new tax on buybacks. Most of these companies had already set the buyback price before the 20 per cent tax on buybacks was introduced in the Budget. “Some companies want to cut the buyback price so that the tax can be passed on to investors. They have asked for special dispensation from the regulator,” said a banker, who added that Sebi’s stand is unclear. About three dozen companies, including Wipro and Adani Ports, had launched buybacks prior  to the new tax .                

Samie Modak
 

IPO grey market activity muted

The activity in the grey market is muted even as two big initial public offerings (IPOs) hit the market this week. Sources say operators are not assigning a high premium to the shares of Sterling & Wilson Solar and microfinance company Spandana Sphoorty. “While these two are good quality companies, not much action is seen in the grey market. Given the weakness in the market, traders are staying away from taking bets,” said a broker. Both Sterling & Wilson and Spandana Sphoorty have cut their issue size to align to the market conditions.     

Sundar Sethuraman