Wind out of the sails

HNIs holding large positions in Suzlon shares are jittery. Reason: the resignation of independent director Marc Desaedeeler. Now, independent directors quitting rarely makes headlines. But in this case, Desaedeeler has flagged corporate governance issues on his way out. The story around the shift to renewables and debt reduction saw Suzlon shares more than treble over the last year. But for the stock to maintain momentum, it needs the backing of institutional investors as well. Domestic mutual funds have been trimming exposure to the stock of late. And until there is clarity on the allegations over corporate governance issues, fund managers are unlikely to jump in any time soon. That means HNIs will have to do the heavy lifting for some more time.

No smooth sailing

HNI is having a fight on its hands in the SAIL stock as well. Ten entities hold 37 percent of the outstanding derivatives positions in the steel major. Till a couple of months back, the narrative was that domestic demand was strong and that the government would take a tough stance on dumping by Chinese firms. But now there is a supply from Vietnamese steel firms as well to contend with. SAIL’s fundamentals are not all that great at this point, compared to peers. Last week Kotak Institutional Equities rated the stock a sell, citing rich valuations, an increase in debt to fund capex, loss of market share, and a reduced probability of privatization. Much of the buying of SAIL shares has come from arbitrage schemes of local mutual funds. That can’t drive prices beyond a point unless you get buyers betting on the steel story.

Kid gloves

The “administrative warning” issued by the Securities and Exchange Board of India (SEBI) to ICICI Bank is the talk of the industry. The warning was issued to the private sector lender after it emerged that a few bank officials repeatedly called up shareholders of ICICI Securities and told them to vote in favor of a resolution for the delisting of ICICI Securities in March. The market is abuzz with talks that such action should be strongly condemned by the regulator since it is a case of alleged influencing of the shareholders. Incidentally, regulatory officials have quite often stressed the fact that the larger listed entities have to set an example in terms of good corporate governance and be good law-abiding citizens. Plenty of conspiracy theories floating around on why the regulator went soft.

Dubai bound

The wealth management arm of a financial services conglomerate that recently got rapped by the RBI is learned to have filed its papers with the Dubai Financial Services Authority for starting its wealth management operations in that country. And more Indian wealth managers are headed to the ‘City of Gold’, this diarist hears. Reason: many Indian family offices have set up base in Dubai and are looking for expert hands to manage their funds.