Parekh's favourite stocks crash further

Parekh's favourite stocks crash further
ENS ECONOMIC BUREAU

MUMBAI, APR 2: The first trading day after the Big Bull's arrest turned out to be volatile and nervous. The benchmark Sensex plunged by a whopping 168 points, or above 4 per cent, intra-day to touch a new 22-month low of 3436.33, but aggressive purchases by domestic institutions and foreign funds prevented a crash on Monday. The index, which has been reeling under the scam, still closed down by 38.12 points at 3566.26.

However, many of the favourite stocks of Ketan Parekh crashed further following the arrest of the Big Bull on Friday. Himachal Futuristic Communication plunged by 15.98 per cent to Rs 133.25 as nervous investors continued to unload Parekh's stocks. Global Tele-systems fell by 15.60 per cent to Rs 136.30. In fact, both these scrips had crossed the Rs 2,500 level last year when tech shares were rigged up by operators.

DSQ Software, another favourite counter of Parekh, plunged by 13.81 per cent to Rs 84.60. Adani Exports fell by 15.98 per cent to Rs 183.80. "These stocks have been going down in the last a few days. These were the favourite stocks of speculators," market sources said, " even mutual funds like UTI had big exposure in such stocks."

Right from the onset of business, share prices exhibited a distinctly weak trend as expected due to arrest of Parekh after business hours last Friday.The initial plunge was also due to media reports attributing the Finance Ministry directing the market regulator SEBI to probe into alleged involvement of UTI in price rigging of some shares of the big bull.

Media stocks were also caught in the vortex of the cyclone raging in the market. As many as 15 of the 16 media stocks edged sharply down in early trades today. The losers include Sri Adhikari Brothers, Pentamedia Graphics, Crest Communications, Cinevista Communications and Padmalaya Telefilms were the other big losers. Parekh was said to have a penchant for media stocks and was responsible for many of the media companies going public in FY 2001. He also has a stake in a number of media companies.

Triumph International, Ketan Parekh's merchant banking firm, co-lead the initial public offerings of some recent IPOs like Mid-day Mutlimedia, Balaji Telefilms, Mukta Arts and Tips Industries. Parekh was arrested by the Central Bureau of Investigation (CBI) after market hours on Friday on complaints by Bank of India that the broker had defrauded the bank by cashing pay orders worth Rs 137 crore drawn on the failed Ahmedabad-based Madhavpura Mercantile Bank. CBI later said that amount involved in the pay order scam could exceed Rs 800 crore.

The BSE sensex resumed with a sharp downside gap at 3491.41 on Monday and touched a low of 3436.33. Later it recouped smartly to a high of 3578.95 before closing at 3566.26 as against last Friday's close of 3604.38, a marginal loss of 1.06 per cent. The BSE-100 index also dropped by 32.45 points to 1659.26 compared with previous close of 1691.71.

"Timely intervention by domestic funds and return of buying enquiries from foreign institutional investors (FIIs) propelled the Sensex on a recovery path after the sustained sellers' onslaught," a broker commented. The involvement of Parekh in a major bank scam and reports of his arrest created a panic situation on Friday and triggered heavy bull unloading by investors, funds and foreign institutions resulting in a sharp fall of over 147 points in bellweather Sensex.

UTI insider trading charge creates flutter
MUMBAI/CHENNAI:Reports that the Finance Ministry had asked SEBI to investigate allegations of insider trading in Himachal Futuristic Communications and Zee Telefilms created a flutter in the market. UTI reportedly owns a 10-15 per cent stake in HFCL.

According to reports, the Ministry of Finance (MoF), in a letter marked "most immediate", had asked the SEBI to investigate "the involvement, if any, of the Unit Trust of India" in insider trading in Indian stocks. Both HFCL and Zee were among the major stock holdings of Ketan Parekh.

"We have already clarified that the charges are baseless," UTI chairman P S Subramanyam told reporters on the sidelines of a business seminar in Chennai. "We need to create a climate of confidence, that is absolutely essentially required and we need to avoid creating a climate of suspicion, which is not good for the market," he added.