Commodities mkt faces risk of default; FT may see more pain
NSEL claims to have physical stocks worth Rs 6,200 crore, this data is yet to be examined. Meanwhile, Reliance Mutual Fund via Reliance Growth Fund also sold nearly 12 lakh shares of Financial Technologies at an average price of Rs 235 per share in two block deals yesterday.
August 02, 2013 / 12:03 IST
For the first time in many years, India is staring at the risk of a default by commodities market. With the National Spot Exchange (NSEL) suspending trading temporarily, experts are now worried that this may spillover to other markets as well, reports CNBC-TV18’s Varinder Bansal.
Also Read: Here's all you ever wanted to know about Commodity FuturesFinancial Technologies shares were battered yesterday slipping 65 percent. More importantly, yesterday the traded volumes on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) put together were 3.3 crore shares, which is 70 percent of the total shares outstanding on a free float. It is much higher than the free float of the company because promoter holding is only 45 percent.Delivery was nearly 40 lakh shares, which were marked on Financial Technologies (FT) shares. This is very high compared to what one has seen on an average, It is nearly 12 percent of the total traded volumes.Reliance Mutual Fund via Reliance Growth Fund also sold nearly 12 lakh shares at an average price of Rs 235 per share in two block deals. As far as the promoter shareholding is concerned, many feel that still the pain could not be over because FII holding or institutional holding in the company is very high. Mutual funds hold nearly 7.5 percent stake. FII holding is nearly 25 percent; and given the current uncertainty high institutional holding of nearly 40 percent could be a dampener for the stock.Also, there are directors who hold nearly 8.5 percent stake in the company. Interestingly, Seth brothers - Bharat and Ravi who are the promoters of GE Shipping, which is a listed company, are the largest known promoter in the company. They hold nearly 8.2 percent stake. Other big shareholder is Blackstone which is holds 7 percent.Meanwhile, the issue has escalated to the level of finance ministry. Yesterday, there were talks that FMC and DCA have met and have together put a word with Securities and Exchange Board of India (Sebi). Sebi has discussed the issue with NSEL brokers. NSEL has said that there are outstanding positions worth nearly Rs 5,500 crore and it owns physical stocks worth Rs 6,200 crore.If in the next few days there is any clarity on the Rs 6,200 crore worth of stock and whether there is any physical verification of that stock, then it could give some relief to the shareholders. But high institutional holding could be a dampener for the stock going ahead if there is no solace from either the government or the ministry. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
