Tough task for Infosys as FIIS continue to cut stake
BENGALURU: Infosys Ltd needs to quickly win back the confidence of some of its largest foreign institutional investors (FII), who over the last 12 months have trimmed their holdings in India’s secondlargest information technology (IT) outsourcing company.
At least three of the company’s long-standing foreign investors, including Oppenheimer Developing Market Fund, Abu Dhabi Investment Authority, and Government of Singapore, have pared their holdings, even as FII holding in Infosys dropped to 35.24% at the end of March 2018 as against 38.31% at the end of March 2017, according to the company’s shareholding pattern.
Oppenheimer Developing Market Fund, which in February last year backed earlier CEO Vishal Sikka in a feud with promoter N R Narayana Murthy, now holds less than 1% in the company, the lowest it has held in Infosys. Both Abu Dhabi Investment Authority and Government of Singapore too have cut their holding in Infosys, the lowest in more than a decade (see chart). FII holding in a com- pany is an important barometer of a company’s performance and their decision to either buy or sell a stock often influences retail or small shareholders, according to equity analysts.
FIIS reducing Infosys stake is in contrast with a surge in share price and market capitalization of larger rival Tata Consultancy Services Ltd. TCS shares have gained 40% in the period between April 1, 2017 and April 20, 2018 even as its market capitalisation rose 33% to $98.53 billion.
Infosys shareholders made a 16% return even as the company’s market capitalisation increased 7.5% to $38.9 billion during this period.
At Infosys, FII selling has come at a time when domestic mutual funds have increased their holding to 10.6% at the end of the latest quarter from 8.33% at the end of March last year. Still, Infosys shares have lagged TCS, and even BSE-IT and BSE Sensex have gained more than Infosys.
not independently ascertain the reason behind these three FIIS cutting their holdings in Infosys, which since August has held at least half-a-dozen investor meetings in India, Singapore, Hong Kong and the US. WASHINGTON: US treasury secretary Steven Mnuchin said he’s considering a trip to China amid a trade dispute with Beijing that finance chiefs warn could derail the global economic upswing.
Mnuchin said he’s “cautiously optimistic” of reaching an agreement with China that bridges their differences over trade.
“A trip is under consideration,” Mnuchin told reporters on Saturday in Washington at the International Monetary Fund’s spring meetings. “I’m not going to make a comment on timing, nor do I have anything confirmed.”
China’s ministry of commerce said Sunday it is aware that the United States is considering a visit to Beijing to negotiate economic and trade issues and welcomes such a move.
A visit by the US treasury secretary to China could signal a breakthrough i n t he spat between the world’s two biggest economies, whose threats to slap tariffs on each other have rattled markets and raised fears of a trade war.
HDFC Asset Management