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Journalism of Courage
Heavy volumes were registered in the Global Trust Bank stock for the second day in a row on Wednesday.
Even as the stock tumbled 28 per cent to Rs 2.42 in a volume of around one crore shares on the BSE and the NSE, market regulator Securities and Exchange Board of India (Sebi) has gone on high alert checking the possibility of any manipulation in the stock.
The GTB stock plunged 68 per cent on Tuesday to Rs 3.36 on a volume of 2.2 crore shares. The huge volumes in the stock in the last two trading sessions are despite the fact that the trading in the scrip is under trade to trade segment (since Tuesday).
‘‘Sebi and exchange officials enquired with brokers who were speculating in GTB stocks,’’ said an NSE dealer, adding, ‘‘they wanted to know why GTB stocks are being purchased when it is as good as junk shares’’.
‘‘We were monitoring the trading in GTB stocks. Not only this, many other small illiquid shares are also under watch,’’ said a Sebi source.
The stock has been put in the trade to trade segment in a bid to curb speculation in the stock. In trade-to-trade segment, every transaction has to result in delivery. Thus, the huge volumes in the counter are all delivery-based volumes. On Wednesday, the GTB stock fell to a low of Rs 2.11 but recovered on buying by speculators.
Market sources said some of the punters were buying into the stock following the crash in the counter. ‘‘Since the stock is in trade-to-trade segment, it ought to be delivery-based buying. It is a gamble that they are taking by buying the stock. At the current Rs 2.42, the maximum loss one can incur is Rs 2.42 per share. On the other hand, if anything positive comes out of the merger, the gains may be large, i.e. even if one gets a price of Rs 4, the returns would be huge. Some high net worth individuals and retail investors were mopping up the stock,’’ said a broker.
Mutual funds and foreign institutional investors sold their stake much before the RBI announced the GTB merger with OBC. Retail investors, who are holding over 51 per cent stake, are now dumping the stock in the market. MFs and FIs hold only 1.54 per cent stake now.
Speculation revolves around the quantum of non-performing assets of GTB. GTB’s gross non-performing assets are estimated at Rs 1,500 crore. If some of such loans are found recoverable that may augur well for GTB, market men pointed out.
