Infy stock may have hit temporary bottom

MUMBAI/ BENGALURU: The huge sell-off in Infosys stocks on Tuesday wiped out investor wealth worth over Rs 53,100 crore (over $7.5 billion). As the stock crashed over 16% on the back of a new whistleblower letter to its board of directors, alleging some aggressive accounting practices by the top management, the market capitalisation of the IT major dipped from Rs 3.28 lakh crore to Rs 2.75 lakh crore on Friday.Using the shareholding structure released by the company to BSE, data analysed by TOI showed that retail investors — who together hold about 5.2% of Infosys — were left poorer by nearly Rs 2,750 crore while the promoters, who hold 13.2%, lost almost Rs 7,000 crore. Among the institutional investors, foreign funds with a combined holding of 33.5% were poorer by Rs 17,700 crore while mutual funds, holding nearly 13%, lost nearly Rs 6,850 crore. Insurance companies lost Rs 5,200 crore, of which LIC, with a holding of 6.1%, accounted for Rs 3,200 crore.Infosys’s shareholding data on BSE showed that as of September 30, other than LIC, HDFC Mutual Fund had a 2.8% stake in the company while SBI MF had a 2.4% stake and ICICI Prudential MF a 1.7% stake. One external analysis showed that as of September 30, over 400 MF schemes together held Infosys stocks worth about Rs 44,600 crore.Among the foreign funds, global assets management giant Vanguard had a 2.7% stake in Infosys while the government of Singapore had a 1.9% stake and Abu Dhabi Investment Authority a 1.2% stake. The company’s GDR holders, through Deutsche Bank Trust Company, had a 17.2% stake. On Monday, which was a trading holiday in India because of state elections in Maharshtra and Haryana, Infosys GDRs had closed 12% lower.Amid the sharp sell-off and huge loss of investor wealth, there seems to be hope that the stock has hit a temporary bottom although the chances of it showing a U-shaped recovery are less. According to Harit Shah, research analyst at Reliance Securities, the stock overhang will continue for a bit, but “it won’t go down from where it currently is”.