Business Today

Up and down with Satyam

Mutual Funds’ sale and purchase of Satyam shares in the last two months reveals an interesting pattern.

     Print Edition: March 8, 2009

As Satyam computer’s chairman B. Ramalinga Raju confessed to a Rs 7,000-crore fraud on January 7, mutual fund managers were quick to get rid of the scamtainted stock in their portfolios. Only four equity-oriented funds held 8 lakh shares of the company as on January 31. According to the portfolio data provided by Value Research, 95 per cent of equityoriented funds, which held 2.82 crore stocks in November, had exited by January. These numbers give an impression that MF managers acted promptly in getting rid of the stock. But, what did they do during December, when Raju announced his plan to acquire Maytas Infrastructure and Maytas Properties? In December, only 43 of the 77 equity-oriented funds either exited the stock or sold off their partial stake, among them UTI Mutual Fund and Reliance Capital AMC.

Some fund houses, however, attempted to buy the stock as it fell sharply from Rs 220-240 level to a low of Rs 114. In all, 18 funds, including those of HDFC MF and ICICI Prudential MF, bought 88 lakh shares. As Raju confessed to fraud, prices crashed to a low of Rs 16. Some fund houses like Sundaram BNP Paribas Mutual Fund and Prudential ICICI Mutual Fund, in fact, were quick to tell distributors that they did not hold any position in the beleaguered company. “We were always uncomfortable with Satyam’s cash position,” says Nilesh Shah, Deputy MD, ICICI Prudential AMC, summing up the general mood among MF managers.

Rachna M. Koppikar

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