US government has announced its $20 bn bailout and a safety net for Citigroup ( Which is holding Punj Lloyd and Rakesh Jhunjhunwala is also holding the same). This has helped push its stock to 6 dollars. This is good news for Citi, US and the global economy. Citigroup and Boeing are the flagship companies of America and its face to the rest of the world. There are few other companies which can be called as symbols of America. But they would be from IT sector (Google, Microsoft, Intel, IBM etc..).
Citibank is an American bank and if US government has helped it then what’s the big deal? There were 22 banks which were failed and there are few other which were helped. It’s business as usual, as far as I am concerned. We can stop at that. But, if we look further Citibank has vested interests in the Indian stock market.
Citibank holds close to $1.4 billion worth of Indian stocks. If there was a liquidity pressure (I bet there is), these stocks would be on their priority list. Not all the stocks are direct holdings as they were sold to their clients and funds via participatory notes. But that does not mean that these stocks were not under pressure.
If the bank wasn’t bailed out now, there would have been severe pressure on few select stocks and Sensex as a whole. Citibank holds 11.76% stake in home loan provider HDFC. 12.42 % stake in KS Oils and several others. It has holdings in 67 companies.
The top 5 holdings of Citibank by market value :
HDFC (11.76% or 4658 crores)
Educomp Solutions (5.48% or 168 crores)
KS Oils (12.42% or 161 crores)
Shriram Transport Finance (3.84% or 152 crores)
Punj Lloyd (2.56% or 116 crores)
Indian stocks might not be out of the woods yet. The mayhem is either delayed or deferred. It is bound to happen. But, not on the scale which is detrimental to the economy but on a scale which serves as lesson for the markets and the investors.
As per Sep 08 share holding pattern of the company, Rakesh jhunjhunwala is holding 5,040,000 shares