Fii Interest In Sbi Scrip Set To Recede On Bourses

According to market circles, the support level for the SBI stock from FIIs and domestic funds would not be present for the SBI stock.

The SBI GDR, which was priced at $ 14.15 per GDR, with each GDR equivalent to two shares, has, however, shown an immediate appreciation in its price on listing yesterday. The FIIs, which had sold the shares at the domestic markets, are eager to buy up the GDRs since they avoid forex risk and incur a lower transaction cost.

According to reports from London, the GDR was quoted at $ 14.50-14.70 on Friday afternoon IST, up 5 per cent over the issue price. The last trade was done at $ 14.60 (the equivalent share price at Rs 261.50) against the closing price of Rs 228.50 at the Bombay Stock Exchange. The SBI stock at the local markets took a further battering yesterday with the presence of FIIs and domestic funds slipping.

 

The stock opened at Rs 240.25 at the BSE but continued to fall further, while at the National Stock Exchange the SBI stock fell to close at Rs 230.35 against an opening of Rs 240.50. SBI witnessed trading of Rs 677.60 crore at the NSE.

The stock has already touched its six month low at the markets, and has fallen by 9.21 per cent since the roadshows commenced on September 20.

Doubts have however been raised over the method in which the SBI GDR pricing took place, arguing that it was a case of `window-dressing' to announce a relatively strong premium in a weak GDR market. The GDR pricing, which for most Indian offerings is done on the basis of a 5 day average price of the stock at the local exchange, was done only on the basis of the last day's average at the BSE.

Says Navin Agrawal of Skindia Finance, ``If the issue pricing is to be based on the five day average, preceding October 3, the average price for the SBI stock for these days (September 26-October 3) is Rs 250.45 on the BSE....the premium then works out to only 0.31 per cent''.

Institutional brokers at the BSE said that interest in the stock would come in after a further FII unloading takes place as the ceiling has been touched. FII sources have also questioned the timing for the GDR and raised doubts over the functioning of the SBI management.

According to C Daniel Tyree, chairman and CE of Lehman Brothers, co-lead managers to the SBI GDR issue, the huge demand from institutional investors in US, Europe and Asia for what is India's largest international equity issue to date means that quality of the book was extremely high.

The market views India positively and that augers well for other Indian blue-chip companies looking to raise capital through the global markets in the coming months, including through the PSU disinvestment plan,'' Tyree added.

The SBI GDR, the largest GDR offering for the year so far, was oversubscribed over two times in a poor market.