Sebi-barred cos plunge; midcap stocks badly bruised

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Sebi-barred cos plunge; midcap stocks badly bruised

The Securities and Exchange Board of India has directed the promoters of Murli Industries, Ackruti City, Welspun Corp and Brushman India not to deal in securities of owned and listed companies, reports CNBC-TV18’s Nimesh Shah.

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The Securities and Exchange Board of India has directed the promoters of Murli Industries , Ackruti City , Welspun Corp and Brushman India not to deal in securities of owned and listed companies, reports CNBC-TV18's Nimesh Shah.

Here is a verbatim transcript of Nimesh Shah's comments on CNBC-TV18. Also watch the accompanying video.

The four companies, which have been mentioned in the SEBI report, obviously the cuts have been pretty deep in those particular four stocks. It is obvious, given the fact that it is a detailed report which clearly mentions as to how in each counters there was price manipulation, price rigging ahead of the fund raising plans of all these four companies. Not only the four names, but also their group entities have been barred from trading. In Murli Industries, there are 19 companies, in Welspun there are 17companeis, so is the case with Brushman India and Akruti City as well. In Akruti City, there are 13-14 front companies of that particular group, promoter entity which has been barred from trading in the equities market. Also is the case with Sanjay Dangi and his assciates, one of the stock broking firm, Ashoka Fincorp, even that has been barred from trading in the stock markets.

This is an ex-parte report from SEBI. So, all these entities have a chance to appeal to SEBI and ask for a personal hearing in the next 21 days. Also, going forward, they can appeal to SAT against the SEBI order. So, that is the provision which is there in the SEBI order, it is clearly mentioned in that report that is one aspect.

The other aspect is the kind of panic which was created in other midcap and smallcap stocks in today's trade. The midcap index is down 1.5% and there are whole host of stocks which have seen a cut of 15-20% in the midcap names. Now, just one clarification all these names like Core Projects , Parekh Aluminex , Amar Remedies , Sangam India , we cannot clearly mention that these are the stocks where there is a direct connection to any of these entities or they are being barred. It's a perception of the market that many of the stocks, which have been down 15-20%, could have a bit of a relationship with the entities which have been banned by SEBI. So that is a reason why stocks like Delta Corp is down 10%, Parekh Aluminex is locked 20% down circuit. MSK Project , which is again Welspun Group company, is locked at 10% down circuit.

Clearly, this has dampened the sentiment in the midcap and smallcap space. Now, there is lot of buzz doing the rounds that maybe in the next few days from here on there could be some more coming in terms of SEBI order.

The mood has changed completely on the negative side for the midcap stocks, at least for the time being. The four names, which have been mentioned, are locked at down circuit. So, clearly a big negative for all these midcap stocks.