Jan 13, 2017 06:25 PM IST IST | Source: Moneycontrol.com
Why are foreign institutional investors selling Axis Bank stock?
The talk of the government looking to sell the 11.7 percent stake in the bank it holds through the Specified Undertaking of the Unit Trust of India. Analysts claim that there is little appetite for the stock among domestic investors and FIIs are selling the stock in any case.
Axis Bank’s shares have come under selling pressure in the last few months, with foreign institutional investors (FIIs) paring their stake. Ownership of FIIs in Axis Bank declined to 49.38 percent in the quarter ended December 31, 2016 from (50.75 percent) in the September quarter. Axis Bank shares are down 14.62 percent over three months.
The talk of the government looking to sell the 11.7 percent stake in the bank it holds through the Specified Undertaking of the Unit Trust of India is an overhang for the stock. Analysts claim that there is little appetite for the stock among domestic investors and FIIs are selling the stock in any case.
There are several factors that have come into play, impacting the stock’s performance. Other than the relentless raids on the bank following demonetization, investors are also now rather concerned about the bank’s stressed assets. A leading domestic brokerage expects fresh slippage of Rs 4800 crore in the December quarter. While this would be lower than the Rs 8800 crore in the September quarter it is still higher at 6 percent of lagged loans, claim analysts.
In the current quarter, analysts expect a large corporate account to slip. One domestic brokerage says: “While Aban could slip, Lavasa which slipped in the previous quarter, will likely get upgraded.” Slippage in non-corporate loans, however, were lower in the September quarter at Rs 600 crore and is expected to decline further as the bank continued with its focus on small loans. Analysts expect gross NPLs to rise from 4.2 percent of loans to 5.0 percent sequentially.