Essar stocks bleed as CBI chargesheet names top officials

Group companies lose Rs 1,293 crore of M-cap in single trading session.

Shares of the Essar group of companies plunged 7-11 per cent on Monday as the Central Bureau of Investigation (CBI) filed a second chargesheet, mentioning top company officials , in the 2G spectrum scam case .

On a day when the stock market benchmark indices lost two per cent of their values, Essar’s group companies —Essar Shipping, Essar Ports and Essar Oil — were among the top losers. In the chargesheet, Essar has been charged with controlling Loop Telecom through a stake in Vodafone. The investigating agency named Essar promoter-director Anshuman Ruia, vice-chairman Ravi Ruia among others, and charged then under Indian Penal Code Sections 420 and 120 (b) which deals with cheating and criminal conspiracy.

Essar Oil was the worst hit as its shares lost around 11 per cent of its value to close at Rs 59.75. Essar Ports and Essar Shipping shed 7.71 per cent and 7.04 per cent, respectively.

In a single trading session, Essar group’s market capitalisation saw an erosion of around Rs 1300 crore. With on Monday’s sharp fall, the group’s overall market capitalisation has declined by Rs 11,000 crore, since former Telecom Minister A Raja’s arrest in February this year.

With this current development, fears are back in the market. Ambareesh Baliga, COO at Way2Wealth Securities, says, “For the last couple of months, a view was forming that such events are now a past story and there will be no repetition. But on Monday’s development raises fear for the corporate sector yet again, and put lot of things in limbo.”

According to market participants, the biggest question is “What next?”. “We are advising clients to stay out from such counters irrespective of the irresistible cheap valuations.” explains research head of domestic brokerage house.

ESSAR’S SCRIP PLUMMET
Company	9-Dec		12-Dec
	Price in Rs	M-cap  Rs crore	Price in Rs	M-cap  Rs crore	% change in price	Change in  M-cap
Essar Oil	67.05	9571.99	59.75	8529.85	-10.89	-1042.14
Essar Ports	66.80	2741.87	61.65	2530.49	-7.71	-211.38
Essar Securities	38.60	55.16	38.10	54.44	-1.30	-0.72
Essar Shipping	24.15	495.63	22.45	460.74	-7.04	-34.89
India Securities	53.00	4641.74	52.95	4637.36	-0.09	-4.38
Compiled by BS Research Bureau

In general, unless investors have conviction and a longer time-frame, better stay out of the markets anticipating reasonable returns from equities is unlikely for the next couple of quarters.