Mutual funds (MFs) and foreign institutional investors (FIIs) have seen sharp erosion in the value of their investments as allegations of corporate governance lapses have pulled down share prices of some of the widely-held companies in recent times.
According to data, the fall in shares of Zee Entertainment, Vedanta and Dewan Housing Finance (DHFL) has eroded close to Rs 11,000 crore of these institutional investors’ wealth in just a month.
The erosion in the value of investments has been estimated based on the shares held by MFs and FIIs as of December 31, 2018, and the change in stock prices since then.
Since January 1, the wealth erosion in case of MFs is Rs 2,505 crore, while for FIIs it is Rs 8,408 crore.
The maximum losses are in case of Zee Entertainment, followed by Vedanta – both the companies are part of the benchmark Nifty index.
Shares of Zee fell 26 per cent on January 25 amid reports of Essel group’s alleged links with a company that was reportedly under probe by the Serious Fraud Investigation Office (SFIO). Fears of promoters’ pledged shares getting invoked added to the selling pressure.
The management’s clarification, however, helped the stock recoup some of its losses but it is still 19 per cent lower since allegations were made.
DHFL was the next company to face stock market wrath after news portal Cobrapost alleged misconduct at the housing finance company. The company’s stock has fallen 37 per cent since Cobrapost made the claims. These allegations were denied by the DHFL management.
On Friday, shares of Vedanta ended 18 per cent lower on concerns over the company’s use of cash. Its subsidiary Cairn India bought a stake worth Rs 1,431 crore in Anglo American from Volcan Investments, a family trust of promoter Anil Agarwal.
As of December 31, MFs held 11.5 per cent stake in Vedanta, while FIIs had 15.8 per cent.
On Monday, Vedanta issued a clarification stating that the transaction carried out by Cairn India Holdings met all the governance requirements. The scrip ended marginally in the red.