Fii Holding In Sbi Has Hit 20%, Admits Rbi

Portfolio investment by FIIs, non-resident Indians and Overseas Corporate Bodies in Elgi Equipments has reached the overall ceiling of 24 per cent of paid-up equity capital permitted. A release issued by the Reserve Bank of India said no further purchases of shares of this company should be made through stock exchanges on behalf of FIIs, NRIs and OCBs.

Interestingly, this is for the first time the RBI has come forward to state that the FII investment limit of 20 per cent has been reached in the SBI stock.

RBI has also announced a list of five companies where the 20 per cent limit has been reached. These include Flat Products, Mahavir Spinning Mills, Oswal Spinning and Weaving Mills, Ramco Inds and Gujarat Ambuja Cements.

 

The apex bank has said that for any further purchases of equity shares of these companies should be made by FIIs without obtaining prior clearance of the RBI.

Other companies in which 20 per cent and 26 per cent limit has been reached and further purchase can be made with prior approval of the RBI include Essel Packaging, BFL Software, Paper Products, Punjab Tractors and TVS Suzuki Motor Cycles.

Brokers say that stocks like Mahavir Spinning Mills, Oswal Spinning and Weaving Mills, Flat Products and Ramco are highly illiquid.

They feel that if foreign institutional investors get the wind of the overall FII holding in the stock, they purchase the stock from the market to ensure that the overall 24 limit is reached.

This is primarily resorted to for ensuring that if there is any other FII willing to purchase the stock even when the 24 per cent limit is touched, it would have to go those FIIs who already own the stock, a dealer at a leading institutional brokerage said.

Brokers have observed such activity in Ramco Industries in the last few trading sessions. According to this dealer, a deal to the tune of 70,000 shares was struck at a price of Rs 1800 last week.

Considering the liquidity in the counter, this is a huge deal, he added.