The lifeline thrown by UTI and LIC to the IDBI counter in the market comes at a time when shareholders are disenchanted with the FI as there has been a 50 to 60 per cent erosion in its value since its public issue in 1995. IDBI officials usually blame the market perception for the fate of the scrip, though they draw the attention to the strong fundamentals of the leading instituion which has an asset base of over Rs 50,000 crore.

Ever since the public issue of Rs 2,250-crore at a price of Rs 130 a share, UTI and LIC have emerged as the key players in the counter on the bourses. The two institutions who were thelargest shareholders with over four crore shares after the government of India in IDBI, brought down their holdings to as low as 1.2 crore shares by end-December 1997. UTI had diluted its holding to 2.2 per cent and LIC to 0.4 per cent.

Over the last seven months, UTI has bought back over 1.5 crore shares, doubling its stake to 4.7 per cent. During the same period, LIC's stake has gone up from 0.4 per cent to 2.1 per cent.

While it is not clear, when and at what range of price the two have accumulated such a large chunk of shares, it appears that the purchases have taken place between April and June, which is reflected in the sharp rise in the trading volumes of the scrip on the bourses. During these three months, IDBI's shares recorded an average volume of four lakh shares a day against the normal volume of 50,000 to one lakh shares a day. By mid-April, IDBI has peaked to Rs 117. It has been on the slide eversince.

IDBI's perfomance has been ignored by the market eversince its listing on the exchangestowards the end of 1995. Very few investors would have got the opportunity to exit at the offer price of Rs 130 as the IDBI scrip remained above this mark only for a week or so. The IDBI scrip hit its all-time high of Rs 134 in June, 1996.

Market players and analysts usually point to the large equity base of Rs 659 crore. With the government holding over 72 per cent, about 18.75 crore is the floating stock in the market. Of the 18.75 crore shares, UTI and LIC today hold about 25 per cent.

Though today IDBI is trading at a 50 per cent discount to its book value of Rs 118, the key to the scrip movement lies in the approach UTI and LIC adopt in the market. Having bought back over 2.8 crore shares over the last seven months, the two institutions might be tempted to sell when the scrip starts moving up again.