The Hindu Business Line : FIIs buying SBI shares at premium

AT a time when the stock of State Bank of India (SBI) is quoting at an all-time high, foreign institutional investors (FIIs) are paying a premium of between 10 per cent and 17 per cent for shares of the country's largest bank.

Brokers said trades, usually among FIIs, in the exclusive institutional window on BSE trading terminals show a substantial premium to the normal market price. SBI shares always commanded a premium in the institutional window because foreign holding in the bank is limited to 20 per cent. However, the premium appears to have tripled from the level of about 5 per cent a year ago. The SBI stock closed at about Rs 675 a share on the BSE today.

An equity dealer with a foreign broking firm said, "With the Government announcing various fiscal reform measures over the past few days, there is a possibility that GDRs may be removed from the 20 per cent (foreign investment) cap in SBI. This expectation is driving FIIs to pay the premium." The stock has gained more than 43 per cent from Rs 470 on December 1, 2003, to Rs 674.50 at close today. According to the shareholding pattern of SBI at end-December 2003, foreign holding is 19.38 per cent, of which 7.88 per cent is through GDR.

In fact, foreign holding in the bank has come down marginally from 19.84 per cent in December 2002 to the current levels. Usually, an FII has to approach the Reserve Bank of India to buy SBI shares and the central bank permits only a limited purchase.

More Stories on : Stock Markets | Foreign Institutional Investors | Stocks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Foreign participation in oil PSUs sell-off cleared — Decision taken at emergency meeting

BPCL in talks with Reliance for long-term purchase agreement

24% rise in direct tax collections

FIIs buying SBI shares at premium

Brokers told to disclose details of bulk deals

Filing returns through employer — New norms prescribed for salaried employees