Airtel stock swings on foreign stake confusion

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MUMBAI: Confusions about the permissible foreign holding limit in Bharti Airtel, as stated by the National Depository Services (NSDL), led to wild swings in the stock on Wednesday. The stock rallied over 13% in early trades on reports that an NSDL document showed 100% foreign ownership was allowed in the telecom company.
But the price slid sharply after subsequent reports said that the foreign holding limit was revised to 49%, with the caveat that the rest was through the government approval route. At the end of the day, the stock closed with a 4% gain at Rs 451 on the BSE.
A higher foreign holding limit is likely to increase the weight of Bharti Airtel in the MSCI indices, which is benchmarked to several global funds that invest in India. This, in turn, will lead to additional foreign fund buying, leading to a rally in the stock. NSDL sources, however, said that it’s been a case of misreporting based on partial disclosure.
A few months ago, Bharti Airtel had disclosed that it already has the government’s permission to raise foreign holding to 100%, but this was subject to the company fulfilling certain conditions. So, it was decided till those conditions are met, the foreign investment limit will remain at 49%, an NSDL source said.
On Wednesday, when the latest document with foreign holding limits for all the listed companies were uploaded onto the NSDL site, due to some reason, the last column in the document that includes the special remarks for each company did not display properly, the source said.
Earlier in August, MSCI had cut Bharti Airtel’s weight in some of its indices and a strong selloff took the stock price from Rs 547 on September 1 to Rs 401 by October 15 — a slide of 27%. During the same period, the sensex had slid just 2.1%, BSE data showed. The next round of MSCI rejig is slotted on November 11 with the effective date December 1.



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