INSUBCONTINENT EXCLUSIVE:
NEW DELHI: A 30-50 per cent drop in stock value over time is worrisome, but if that happens in a single day, it is insane.
Such flash crash
in stocks has not spared even Nifty firms
While companies have promptly come up with clarifications to ease investor fears and address rumours, analysts say usually there is no smoke
without fire in stock market.
Most of the stocks that have come under pressure either have high levels of debt, share pledges or have seen
While it is not easy to quickly verify the authenticity of allegations of financial irregularities, market veterans urge small investors to
Ambani, President Head of Research, YES Securities.
Season of crashes at peakDHFL was in the news last week after Cobrapost claimed a Rs
31,000 crore financial scam by promoters
The scrip has lost 43 per cent of its market value in eight sessions till Wednesday.
The promoters have denied any wrongdoing and assured
the market that the liquidity situation at the firm remains manageable.
Vedanta saw its worst fall in eight years after subsidiary Cairn
India Holdings bought a stake of Rs 1,431 crore in Anglo American from Volcan Investments, which is a family trust of promoter Anil Agarwal,
raising corporate governance issue
Essel group stocks were in the news over alleged transactions with Nityank Infrapower, a firm being investigated for suspicious deposits
after the demonetisation drive in November 2016
The group has denied these allegations
That said, the sharp drop in shares made Zee Chairman Chandra acknowledge that buying D2H from Videocon was a wrong investment decision
He also admitted to making some incorrect bids in the infrastructure space.
The group has reached a formal pact with its lenders, including
mutual funds and non-banking finance companies (NBFCs), not to sell pledged shares of Zee Entertainment and Dish TV till September
By this time, the group expects to monetise non-media assets and pare debt.
The Zee stock plunged 27 per cent on January 25
Dish TV shares fell 33 per cent
The two scrips are down 41 per cent in last one month
In the last week of January, the company said it received two queries from Sebi, but refused to disclose if those were related to the
The scrip has lost one-third of its market value in three months.
RCom shares plunged 48 per cent on Monday after the company said it will
file for bankruptcy protection.
What should investors doAmbani said the one key lesson he learnt in the market is that when there is
relentless fall in a stock, there is usually something wrong.
It is said in market parlance, "Bhav bhagwan che" (price is god).
Before
investing in stocks, one needs to do some due diligence and not simply rely on tips, media talk and expert recommendations on TV, said
Deepak Jasani, Head for Retail Research at HDFC Securities:
Once a stock sees a sharp drop, investors have two choices: They can exit at the
says investors should not get impressed by the stature of a businessman or a company
In case, one is not able to do this, equity investing through the mutual fund route is the best choice, as the risk through mutual funds is
said investors must cultivate a habit to know what they own and why they own it
There are a hundred potential ideas
A growing company with a clean management is the starting point
Unless you are thorough in your study, always have a margin of safety; i.e
Sebi on Tuesday asked stock exchanges to step up surveillance on intra-day trading in the wake of significant volatility in a few stocks
A troubled airline, a media conglomerate facing liquidity crunch, a finance company under lens for alleged payment defaults, a pharma major
being probed for insider trading and other violations as also a mining-to-infrastructure major are currently under the scanner of BSE and
NSE.
What extra can the regulator doKotak Securities does not believe promoters alone can be held responsible for financial impropriety when
a purportedly independent board of directors oversees the conduct of the management.
The market regulator, Kotak said, could be compelled to
implement stricter standards for directors of companies entrusted with financial propriety.
Besides, the brokerage found prevailing
disclosures norms on promoter holdings to be inadequate, as most Indian promoters hold shares through holding companies and not in their own
Due to this, stock exchanges only report the total number of shares held by holding companies without disclosing the primary entities that
holding companies may give an incomplete picture to minority shareholders, who on the other hand will typically hold shares of companies
unlisted entities, where they hold a majority or significant ownership (26 per cent)
