Midcap shares slump on talk of sale of pledged shares

MUMBAI Mon Feb 25, 2013 6:25pm IST

A broker reacts while trading at a stock brokerage firm in Mumbai October 6, 2008. REUTERS/Arko Datta/Files

A broker reacts while trading at a stock brokerage firm in Mumbai October 6, 2008.

Credit: Reuters/Arko Datta/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - Mid- and small-sized stocks slumped on Monday, with welded steel pipe maker Welspun Corp ending down 20.4 percent and Core Education losing 62.4 percent, on speculation that the pledged shares of these companies were being sold off, dealers said.

Controlling stakeholders of Indian companies often receive loans from financial institutions, pledging their shares as collateral, making these stocks vulnerable to any rumours of liquidations.

The total value of pledged stocks in India reached 1.5 trillion rupees as of the end of December, according to a Morgan Stanley report last week, marking a 5 percent increase from the July-September quarter.

"It looks like a bear attack on stocks which are highly pledged," said Kishor Ostwal, Chairman at CNI Research, a research and advisory firm in Mumbai.

Shipbuilder ABG Shipyard Ltd (ABGS.NS) and Aanjaneya Lifecare Ltd AANJ.NS fell by their daily limit of 20 percent, while Core Education & Technologies Ltd (CORE.NS) was down 62 percent.

Officials at Aanjaneya Life and Core Education were not immediately available for comment. Welspun was not immediately reachable. ABG Shipyard said it would issue a statement later in the day.

ABG Shipyard chief financial officer and executive director Dhananjay Datar told ET Now TV station the company did not know the reason for the steep falls in its share prices, while saying he was not aware of any selling in pledged shares by controlling stakeholders.

India's midcap shares have been under pressure this year, due to concerns about their earnings as well as persistent speculation of funding issues that are leading to the sell-off of pledged shares.

Shares of Housing Development & Infrastructure Ltd (HDIL.NS) fell 31.2 percent in January on continued market speculation over its debt repayments.

(Reporting by Abhishek Vishnoi and Manoj Dharra; Editing by Rafael Nam and Sanjeev Miglani)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Wilful Negligence?

Wilful Negligence?

SEBI piles pressure on Sahara to sell overseas hotels  Full Article 

Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage