Firesale by Morgan Stanley. Wassup?

Unloads nearly 8% of its total holdings in India in a day
This is exactly how Bear Stearns proceeded in March before throwing in the towel
CEO Ramachandran said to be meeting top brass in New York l 8 bulk deals in 7 scrips constitute 80% of FII-segment sales on Wednesday

MUMBAI: Morgan Stanley is pressing sell — big time — in India. Sign of another impending collapse or an SOS merger?

Doubts arise, because this was the exact path taken by two other Wall St giants, Bear Stearns and Lehman Brothers, before they went belly up in full public view.

On Wednesday, Morgan Stanley Mauritius Company Ltd, an arm of the world’s No. 2 investment bank, sold stocks worth Rs 871 crore in a rash of block deals, including one in United Spirits for Rs 339 crore.

That’s about 8.5% of its total holdings in the country worth Rs 11,200 crore, according to stock exchange data.

This selling accounted for more than 80% of total provisional foreign institutional investor sales of Rs 1,064 crore on Wednesday.

Narayan Ramachandran, CEO and country head for Morgan Stanley in India, did not respond to an e-mail query by DNA Money.

Company sources said he is in New York meeting with the top management.
The selling was executed through 8 bulk deals in 7 scrips. As a result, four of these shares ended the day with 4% losses.

The other three closed with marginal gains. The deal size ranged between Rs 9.2 crore for Subhash Projects and Rs 339 crore for the United Spirits share block.

In a similar move in March, Bear Stearns liquidated almost 10% of its portfolio of small and mid-cap stocks in India just one day before an announcement was made on Wall Street pre-trade that the company’s cash position had “significantly deteriorated.” (Bear Stearns flushes mid, small-caps on NSE, story break by DNA Money on March 15).

Media reports earlier on Wednesday said Morgan Stanley is weighing whether it should remain independent or merge with a traditional  bank, given the recent turbulence in the company’s share price.

Morgan Stanley officials were not in merger talks as of late Tuesday, CNBC said, citing unnamed people close to the matter.

“But senior people at Morgan concede that further zig-zags in the company’s stock price could and possibly will force the company to change course and seek a merger partner, probably a well capitalised bank,” CNBC reported on its website, said Reuters.