The move of foreign investors cashing big in private sector lenders over the past week may extend to other sectors as well, given the need for capital in their domestic markets amid the Eurozone crisis, analysts feel.
According to market experts, emerging markets like India give good returns to foreign fund houses -- which is why they are taking investments out from the local market at higher levels to put more capital in their own markets.
"Foreign investors have booked profits as Indian markets provide them good returns. FIIs need huge cash flow in order to reduce risk in their domestic markets, amid the Eurozone crisis. The two transactions during the past week indicate that they may take the exit route from other sectors like realty, pharma and IT too," CNI Research CMD Kishore P Ostwal said.
Last week, Netherlands-based financial services major Rabobank sold about 11 per cent stake in private sector Yes Bank to a clutch of investors for over Rs 982 crore.
The bank had placed 3.73 crore shares of Yes Bank in a diversified group of reputable institutional investors, domestic as well as foreign.
Meanwhile, Rabobank said that the decision to sell 11 per cent stake in Yes Bank was part of its plan to operationalise its own banks in the country. The bank, as part of its overall business plan for India, is obliged under the regulations to reduce its holding in Yes Bank, pending approval of its application for a full banking licence here.
"Such deals show the growth opportunities in Indian domestic markets. There are several companies that have foreign holdings, but such deals take time to happen. This may extend to other sectors also, as FIIs are in need of cash," SMC Capital vice-president Rajesh Jain said.
Other private sector companies that have foreign investors include Axis Bank, Glenmark Pharma, HDIL, HCL Technologies, Idea Cellular, Indiabulls Real Estate Development Credit Bank, Dhanalakshmi Bank, Federal Bank, IndusInd Bank, J&K Bank, Karura Vysya Bank and South Indian Bank.
During the week, another Dutch financial services major -- ING -- exited private sector Kotak Mahindra Bank by selling its entire stake in a block deal, for Rs 801 crore.
ING sold its 3 per cent financial investment stake in Kotak Mahindra Bank.