MUMBAI: For a large number of FIIs, it’s the time to churn. And in most cases such churns are happening from their participatory note (P-Note) account to the direct FII accounts, institutional dealers pointed out.
For the mutual fund houses however, it’s a mixed bag. Fund managers who are lucky to have a stable investor pool, for them it’s time to do some bottom fishing and buy those stocks which till recently looked out of reach. Thanks to the current market uncertainty.
But not all are so lucky and are compelled to sell in small quantities to meet redemption requests from investors, fund managers and dealers said. An institutional dealer with a foreign brokerage pointed out that where FIIs who also run parallel P-Note operations, are now preferring to have their P-note holdings transferred to the main FII account.
In some cases, P-Note holdings not with the same FII are also being transferred to other main FII accounts. Called ’crossing’ in market parlance, frequency of such trades have suddenly increased since October 17 after Sebi made public its proposals to limit use of P-Notes for investing in the Indian market.
However, not all FII-to-FII trades are shift from P-Notes to main FII accounts, the dealer said.
On Tuesday, in a deal worth nearly Rs 365 crore, Crown Capital sold 1.04 crore shares of United Breweries to DB International Asia Ltd, a Singapore-based FII arm of German banking major Deutsche Bank. In another deal worth about Rs 9.6 crore, CLSA Mauritius sold nearly 5 lakh shares of Radico Khaitan, also to DB International Asia. On Monday, the same Deutsche Bank arm had bought about 66 lakh shares of ICICI Bank on the NSE, worth nearly Rs 700 crore. In yet another deal, DB International also bought about 49.6 lakh ICICI Bank shares from ABN Amro’s London branch for Rs 520 crore.
Local mutual funds, however, are not involved in P-Notes business but even they have to face the volatile times like any other investor. For some fund houses however, this is the time to buy some quality stocks at good prices. The recent swings have are throwing up good stock-picking opportunities to the smart ones.
