Mid-cap stocks crack again,Opto Circuits shares tank 23%

Renewed concerns over corporate governance issues drove traders.

Written by Fe Bureau | Mumbai | Published: June 11, 2013 12:50 am

While the benchmark indices managed to reverse intraday losses,mid-cap stock indices ended down nearly 1% as traders booked profits in mid-cap stocks on renewed concerns over corporate governance issues.

The BSE mid-cap index ended at 6,331.85,down 56.17 points on Monday or 0.9% as further weakening in the Indian rupee caused more worry on the Street. The small-cap index also followed suit,falling 0.8% from its previous close. In contrast,the Sensex gained 11.84 points or 0.06%,after losing over 200 points intraday.

Last week,the broader markets had ended marginally higher compared to the near 2% drop in benchmark indices,Bloomberg data showed.


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Opto Circuits shares were the biggest losers on Monday. The stock plunged over 23% to its lowest level since August 2005 as speculation over promoter share pledging came to the fore once again. While the management has clarified that none of the promoter shares have been pledged,the Street remains unconvinced,analysts said.

The scrip ended R6.65 lower at R21.85 apiece on Monday. As many as 5 crore shares changed hands on BSE and NSE,up 859% from its 30-day average volume of 52.04 lakh shares. The stock has fallen 60% in the last one month.

The fall in stock price of Opto Circuits also reflects the below-par quarterly results announced by the company. The Bangalore-based manufacturer of technologically-advanced medical equipment and devices saw its Q4FY13 profit drop 94.12% to R12.3 crore.

In Q4FY12,the company posted a consolidated net profit of R 210 crore. The company has announced plans to pare its debt and sort out working capital issues by selling stake in its subsidiaries.

Shree Renuka Sugars was another notable loser in the mid-cap space,with the stock falling 17%.

Over 2.2 crore shares were traded on the exchanges compared with its 30-day average volume of 49.23 lakh shares.

Other major losers in the mid-cap space include Jet Airways (-11.18%),Lanco Infra (-10.47%),Monnet Ispat (-14.15%),Jain Irrigation (-9.08%),Core Education (-5.88%),BGR Energy (-5.64%).

In March this year,Core Education confirmed pledging of shares by the promoters after the stock had declined 82%. As many 2.52 crore (nearly 48%) of the promoter shares were pledged with the financiers,as per the company’s executive director,Maya Sinha. “There are several stock specific issues within the mid- and small-cap space. In the case of Opto Circuits,we advise investors to exit the stock due to its weak corporate governance and piling debt. Overall the market trend is weak because of global and domestic economic concerns,coupled with possible FII outflows,” said a senior research analyst of a domestic brokerage firm,requesting anonymity.

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