FIIs cherry-pick PSU banks in March quarter

Trim positions in majority state-owned lenders

Foreign investors do not seem enthused with the prevailing positive sentiments towards state-owned banks. At a time when most of the market participants are talking high of PSU lenders, foreign institutional investors (FIIs) cherry-picked a few, while continuing to trim their positions in majority of the banks.

They have been quite selective in raising holdings in public sector lenders which have continuously been under pressure on the back of rising non-performing assets. Not only have they remained cautious on state-owned lenders, they have had the same stance for private lenders, shares of which have already had a good rally on the bourses.

Banks on foreign institutional investors' (FIIs) radar are India's largest lenders - the State Bank of India (SBI) and the Bank of Baroda (BoB). These state-owned entities have witnessed an increased FIIs' holdings in the latest share holding pattern disclosed by banks.

On the stock exchanges, shares of SBI have run up close to 40 per cent since it touched a 52-week low, while those of BoB rallied over 45 per cent.

For instance, in BoB, FIIs raised stake marginally by eight basis points or bps (one basis point is the hundredth of a percentage point) to 15.6 per cent while SBI could see a reasonable rise of 66 bps to 9.7 per cent. Punjab National Bank (PNB), in which FIIs holding is the highest, is yet to declare its latest share holding pattern. Stocks of PNB have almost doubled after it hit an year low.

However, FIIs largely stayed away from mid-and-small-sized state lenders - majority of which saw foreign investors slashing exposures. Be it Syndicate Bank, Dena Bank, Union Bank, Canara Bank, Bank of India, Central Bank or Indian Overseas Bank, FIIs have trimmed their positions during the quarter ended March, 2014.

Interestingly, the shares of entities like IDBI, Andhra and Oriental Bank of Commerce were picked up by FIIs.

Among the top private lenders, ICICI Bank and IndusInd Bank could see FIIs raising stake during the quarter. On the other hand, they pared holdings in HDFC Bank and Kotak Mahindra Bank. Axis Bank and YES Bank are yet to declare their share-holding pattern.