Market punishes stocks under regulatory glare

DLF, Jindal Steel and Dabur fall up to 9% intra-day

Investors on Monday dumped shares in companies under the regulatory glare for irregularities in their business operations. These included DLF and Jindal Steel & Power (JSPL) .

DLF, facing a three-year securities market ban, saw its shares close 7.8 per cent lower at Rs 110.5. JSPL, undergoing a probe into coal block allocations, ended 7.9 per cent lower at Rs 152.7. Dabur India, one of whose promoters was named in an unaccounted money case, ended three per cent lower at Rs 209.2.

Shares of all three had fallen as much as nine per cent during intra-day trading.

The companies have issued clarifications but the market remains divided about the future of these stocks. Vivek Mahajan, head of research at Aditya Birla Money, believes these could see further selling pressure “because it is a corporate governance issue and these will not go away in a jiffy. These stocks are likely to be remain under pressure”.

Another section believes these stocks might see further serious correction only when the charges are proven. In the case of Dabur India, many believe the stock will not see much of a downside, as the company has issued clarifications against the charges laid against its promoter, Pradip Burman.

In the case of DLF, fresh negative reports over government action on controversial land deals had added to the already negative sentiment around the stock, said analysts.

JSPL, on the other hand, could continue to remain under pressure, as corporate governance continues to worry investors.