Retail investors appear to be the smartest

Mumbai: Going by the latest shareholding pattern in the once-favourite Himachal Futuristic Communications Ltd, it looks like the much-underestimated retail investors are smarter than they were earlier viewed.

The company's FII-holding is down to an absurd level of 2.80 per cent in comparison to the 23.6 per cent in June 2001. Curiously, FIIs have exited from their holdings at ridiculously low prices, which might have inflicted heavy losses on them and caused holes in their pockets.

Clearly, the mighty FIIs are equally vulnerable to the vagaries of the stock markets as others, which gives rise to serious doubts about their capability and their ability to read Indian markets. It also raises questions whether these FIIs should be chased for giving out opinions on the possible direction of the market.

In the beginning of July 2001, the HFCL scrip was ruling at about Rs 90, after which it fell steeply to the Rs 25-level in September 2001. It can be safely concluded that, worried by the adverse propaganda, which the scrip received at the hands of the Press in the period under reference, the FIIs sold heavily, which apparently now is one of the main reasons for the scrip to fall.

Even Kerry Packer, the Australian media baron and tycoon of the Channel Nine fame, sold off heavily in the period under consideration, bringing down his holding to a lowly 6 per cent from the July level of 9 per cent. The price at which Kerry packer and the FIIs had picked up stake in HFCL was Rs 1,450 and therefore losses, to both these categories of investors, has been huge.

In this chaos and confusion, the retail investor has emerged winner. Thus, holding of the public at large during this period has increased to about 35 per cent in comparison to 16 per cent, which means that the stocks sold by Kerry Packer and the FIIs were picked up by retailers. The holding of the promoters has also increased marginally; it presently stands at 19 per cent from about 18 per cent in early July.