Not only retail investors, FIIs also lost money in midcap stocks in last three years

MUMBAI: Retail investors are not the only ones whose bets on midcap stocks have gone awry. Even savvier foreign institutions have lost money in smaller stocks. According to an ET study, these investors are stuck in over 200 stocks that have fallen by 75% to 99% over the last three years. Some of these stocks include GMR Infra, JP Associates, Unitech, JP Power and KSK Energy among others, which have halved in the past one year even as the benchmark indices rallied.

About 100 stocks, in which FIIs hold more than 10%, have fallen more than 70% in the last three years. For instance, FIIs hold more than 31% stake in JP Associates. The stock has fallen 77% in one year, and 95% from its alltime high hit in early 2008. FIIs including HSBC Global, Platinum Investment and Orbis Global are some the investors.

Shares of Monnet Ispat have fallen 73% in the past one year, and about 95% from its all-time high hit in 2008.

“A foreign fund manager based aboard typically tracks at least 10 countries with a small team with each person responsible for selecting stocks from three countries, making it impractical for them to have a bottomup approach that's needed in smallcap and midcap stocks,” said Arun Kejriwal, founder, Kris Research.

“Picking smallcap or midcap stocks needs to have continuous assessment monitoring and management interactions and should not only be guided solely by the balance sheet.” Shares of Reliance Communications have declined 56% in the last one year, and 92% from its 2008 highs.