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Our Bureau

Mumbai, Oct. 17 Over 40 Indian securities have been lent overseas by FIIs between October 10 and October 14, according to the first set of data (not comprehensive) available on the SEBI Web site.

The markets regulator had this week asked FIIs and their sub-accounts to report the position of Indian securities lent to entities overseas, which would have the effect of a short sale in the security in the Indian market.

The data uploaded on Friday was compiled from reports submitted by 17 major FIIs, said SEBI.

The regulator said it expects the subsequent reports to be more complete. “The outstanding position as on October 9 has also been called for, which shall be disseminated as soon as it is available,” said SEBI.

The regulator’s intention is to discover if there is a correlation between FIIs lending of Indian securities and their sales in Indian securities here.

If the securities lent by the FIIs are sold, and the borrower promises to make good the securities later, then this would constitute a short sale.

For argument’s sake, one could take the data made available on Friday by SEBI and assume that all these shares that were lent were sold in an exercise that constituted short-selling (which is what the authorities are trying to find out). One could correlate this to how the stock has been faring during the period to determine if there is any effect on “shorting”.

ITC, of which 22.9 lakh shares (less than 0.1 per cent stake) were lent overseas by FIIs (on October 10, 13, 14), has fallen by 0.03 per cent on BSE since October 10. L&T declined 10 per cent during same period; FIIs had lent 8.21 lakh shares in the company, constituting 0.28 per cent stake in it. However a scrip like HDIL, of which 12.66 lakh shares (0.45 per cent stake) were lent, has gained by 10 per cent. Hindustan Unilever, of which 7.85 lakh shares were lent, was flat during the period. And ICICI Bank, in which 2.68 lakh shares were lent, gained more than 1 per cent.

Analysts said that the data submitted by FIIs was not comprehensive. “More than that, we feel there is no way of verifying the authenticity of this data,” said a legal expert.

As of October 17, 2008, the number of foreign institutional investors registered with the Securities and Exchange Board of India stood at 1,539.

More Stories on : Foreign Institutional Investors | Regulatory Bodies & Rulings

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