Emami Infrastructure’s shares slashed down after listing

Posted by on Jul 28, 2010 | Leave a Comment

Today Emami Infrastructure Ltd has listed in NSE (National Stock Exchange) with high mark as 598.80 INR, but within one hour the share price slashed down to 86.0 INR due to doubtful matters like price manipulation & transparency.

FMCG major Emami Ltd is parent company of Emami Infrastructure Ltd. Emami Infra starts trading on the national bourses. During early trading hours kicked up quite stormily. Listing shares of Emani Infrastructure Ltd opened with 598.80 INR on National Stock Exchange (NSE), but finally it slashed down to 86.0 INR in an hour, which makes clear that Emami Infra shares fell down 86 %. The total traded volume was approximately 8.9 million shares on NSE.

Meanwhile, on Bombay Stock Exchange (BSE), Emami Infra shares opened at 250 INR, raising a high of 293 INR and then after crashing to a low point of 86 INR. On BSE, the whole traded volume was about 5.8 million shares. Emami Infra’s shares were trading 102 INR on both stock exchanges: BSE & NSE when the time of writing arrived for Emami Infrastructure listing.

The variations of untamed in the Emami Infrastructure share price & filling up gap along with the opening high price & day’s low price in a short period of time which is pulled a lot of doubt.

Definitely, so much manipulation must have been carried out close this stock which pleads interference from regulatory.

The listing of Emami Infrastructure share was carried out following the shareholders’ approval where 1 Emami Infrastructure share would be issued for every 3 Emami shares, while 14 Emami shares of Rs2 each will be issued for every one Zandu share of Rs100 apiece.

Market experts consider that scheme will not only help Emami and Zandu stakeholders in opening the value, but also make possible it to further grow its FMCG business and real estate business.

Most brokers were uninformed for the situation and they also could not defend the wide price differential between the opening price at the two bourses or the wild gyrations in subsequent trading.

Alok Churiwala, managing director, Churiwala Securities recommended that the only plausible explanation could be the time lag between the two stock exchanges. “NSE has a system of trading on co-located servers. It means that certain brokerages have their servers in the same facility as the NSE server. This enables them to trade within milliseconds, wherein hundreds and thousands of trades can take place. If one computer can do hundreds of trades in this time, imagine 10-15 computers doing it at the same time. By the time these prices reach the rest of the market, there could be a time lag. Possibly, by the time BSE could react to the prices, the ups and down would have already occurred at the NSE.

Mr Churiwala said as commenting on the chances of price manipulation, “One can’t infer that directly, but there could be some element of price manipulation. A movement like this is what gives rise to suspicion in minds of investors and is a fit vase for investigation.

Emami Realty, the erstwhile unlisted realty subsidiary of Emami, is now Emami Infrastructure. Zandu Pharmaceutical Works, which was renamed Zandu Realty following the restructuring which is now a listed real estate company and a subsidiary of Emami Infra.

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