Market regulator Sebi and the two stock exchanges,NSE and BSE,have swung into action to stem large scale sell-off in a host of midcap stocks,amid concerns of possible manipulation of their share prices.
The BSE and NSE,in consultation with Sebi,jointly announced today that they have decided to reduce the price bands of six stocks to five per cent on surveillance concerns.
These stocks are Parsvnath Developers,Tulip Telecom and Era Infra Engineering,Glodyne Technoserve,Radico Khaitan and Pipavav Defence & Offshore Engineering Company,all of which witnessed sharp plunge in their share prices yesterday.
In today’s trade also,Parsvnath,Pipavav Defence and Glodyne Technoserve plunged by up to 20 per cent,although Tulip,Radico Khaitan and Era Infra managed to move up.
The two stock exchanges have also begun seeking clarifications from large brokers and clients who have dealt in these stocks,while Sebi is inspecting data in its market surveillance system to find any unusual trades.
Hectic selling was witnessed in many other mid-cap and small-cap companies yesterday amid speculations about high level of pledging of promoter shares and margin calls being triggered in these shares.
There were also rumours about some big market operator offloading large number of shares,as also concerning the sale of shares by Mauritius-based foreign entities in the market.
Sebi and the bourses,which function as front-line stock market regulators,are also looking into trading pattern of a host of other midcap and small-cap stocks,sources said.
Although the market barometer Sensex today saw a smart rally of close to 200 points (1.2 per cent),the mid-cap and small-cap stocks were under pressure and their indices closed nearly 1 per cent in the red.
The companies like Parsvnath,Tulip and Pipavav on their part have said they are not aware of any material developments and termed the speculations as mischievous in nature.
The price bands would be lowered to five per cent for six stocks with effect from July 30,after which trades would not be allowed beyond five per cent movement in their shares.
“Due to Surveillance concerns,BSE and NSE in consultation with SEBI,have decided to reduce the price bands of these securities to five with effect from July 30,2012,” the stock exchanges said in a joint statement.
“The above measure was communicated to the Exchanges for implementation today during pre-open phase,however as revised price bands were being implemented,market opened,” it added.
“Since a few trades were already executed at the original price band of 20 per cent the price bands were restored back to 20 per cent in a coordinated manner by both the stock exchanges in consultation with SEBI in these stocks to ensure uniformity among investors trading these stocks,” the statement said.
Among others,Tulip Telecom fell 40 per cent in the intra-day trade and closed 26 per cent lower yesterday.
Besides,Parsvnath Developers,Pipavav Defence and Era Infra,closed at the 20 per cent lower circuit level yesterday.
Others to have witnessed sharp plunge yesterday included Monnet Ispat,Everonn Education,Radico Khaitan,SRF Ltd and Glodyne Technoserve. In most of these companies promoters have pledged significant level of their shareholdings.
Reacting to the sharp plunge in their share price,companies like Tulip Telecom,Pipavav and Parsvnath Developers said that “mischievous” speculations are being spread among investors.
The companies said that the rumours were mischievous in nature and no new development have taken place that can have impact the company’s operations or business.
In today’s trade,Tulip Telecom climbed 13 per cent to close at Rs 99.5 on the BSE,Radico Khaitan surged as much as 7.65 per cent to settle at Rs 109.05 Era Infra Engineering jumped 19.97 per cent to Rs 137.85.
However,Pipavav Defence,Glodyne Technoserve and Parsvnath Developers continued their down slide in today’s trading as well.
Pipavav Defence tumbled by 10.54 per cent to settle at Rs 55.6,Glodyne Technoserve plunged 19.99 per cent to Rs 218.90 and Parsvnath nosedived 19.89 per cent to Rs 37.05.
Overall,mid-cap indice closed at 5,887.50 points,down 0.9 per cent,while small-cap segment fell by 0.97 per cent to settle at 6,357.60 points.
The BSE 30-scrip benchmark Sensex closed nearly 200 points up today at 16,839.19.
Stocks More on Tulip Telecom
Company INFO More on Radico Khaitan