The Hindu Business Line : FII interest perks up in Bank BeEs

FOREIGN institutional investors have started buying the units of Benchmark Bank BeEs, an exchange traded fund, due to their inability to buy shares of key bank stocks, as FIIs have reached the maximum limit in major banks. There has been a sudden inflow of funds in the Bank BeEs, a passively managed exchange traded mutual fund scheme tracking the NSE's CNX Banking index.

Bank BeEs is traded like any other securities on the NSE. It closed the day at Rs 437 against the previous day's close of Rs 435.75 with 2,028 units changing hands.

In July alone, more than Rs 1,100 crore has come into this scheme. The corpus of this scheme increased to Rs 1,470.87 crore at the end of July from Rs 369.36 crore at the end of June . Due to the large inflows in this scheme, the total corpus of Benchmark Mutual Fund has increased to Rs 1,724.43 crore in July (Rs 619.67 crore), a rise of 178 per cent.

The banking index rose 19.87 per cent in July to 4361.15 (3638.40).

Officials at several broking firms with FIIs as their clients said that there is a sudden interest of FIIs in Bank BEes. This has happened as the FIIs reached the maximum 20 per cent limit in key bank stocks such as State Bank of India, Punjab National Bank, Oriental Bank of Commerce and Bank of Baroda and fresh purchase in these stocks cannot be undertaken.

The caution limit has been reached in key stocks — ICICI Bank and Union Bank of India — part of CNX Banking index, which means that FIIs have to take RBI permission to buy the shares of these banks. All these stocks constitute more than 70 per cent of weightage in CNX Banking Index. However, the remaining six stocks in this list have not reached the maximum FII limit.

Brokers said most of the new FIIs are purchasing the units of Bank BeEs.

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