The sharp increase in the shareholding of Foreign Institutional Investors (FIIs) coincided with a massive rally of 88 per cent in the share price of Hyderabad-based SKS Microfinance between July and September this year.

On the other hand, the total promoter holding dipped to 29.58 per cent during the quarter from 37.62 per cent in April-June 2012, as per information available with the stock exchanges.

Helped by the significant share purchase by FIIs, SKS Microfinance stock rallied by about 88 per cent between July 1 and September 30, after a plunge of 34 per cent in the preceding three months.

The stock has taken a major beating since its listing in August 2010 at a price of over Rs 1,000 per share and is currently trading at near Rs 120 per share at the stock

exchanges. The company had debuted on the bourses after sale of shares in initial public offer (IPO) at a price of Rs 985 a piece.

The foreign investors that have acquired fresh shares during the last quarter include CLSA, Royal Bank Investment, Credit Suisse and Morgan Stanley.

Currently, CLSA (Mauritius) owns 8.77 per cent, while Royal Bank Investment Partners (London) owns 4.62 per cent.

Morgan Stanley (Singapore) and Credit Suisse held 4.16 per cent and 1.48 per cent stakes respectively.

Besides, the number of FIIs stands at 30, up from against 24 at the end of April-June quarter.

Analysts believes the fresh infusion of capital through a qualified institutional placement (QIP) route in July as well as the company's reduction of its exposure to its main state, Andhra Pradesh, have helped FIIs to rush towards it.

Moreover, SKS trimmed its losses in the second quarter of the current fiscal to Rs 262 crore as against Rs 384.5 crore in the corresponding quarter last year.

The losses narrowed due to a drop in bad debt provisions after the mico lender reduced its exposure in Andhra Pradesh.

The company's operations went into a tailspin after Andhra Pradesh came up with regulations in October 2010 restricting lending and recovery.