Bears claw Anil firms' stocks on probe buzz

The combined market capitalisation of the Reliance Anil Dhirubhai Ambani (R-ADA) group fell by Rs 11,520 crore today. This followed market rumours that the Central Bureau of Investigation (CBI) could question or even arrest senior officials of the group in connection with the 2G scam.

Shares of major group companies slumped by 8-14 per cent. While Reliance Communications was down 14.32 per cent to close at an all-time low of Rs 94.85 on the Bombay Stock Exchange (BSE), Reliance Infrastructure fell 18.79 per cent to Rs 534.70.

Others like Reliance Capital lost 14.05 per cent at Rs 412.90, Reliance Power shed 8.93 per cent at Rs 113.15, Reliance Mediaworks declined 16.11 per cent to Rs 129.90 and Reliance Broadcast Network slid 9.83 per cent at Rs 62.35.

The R-ADA group lashed out at “unscrupulous corporate rivals” for spreading “completely baseless and motivated rumors”. A statement issued by the group said this was accompanied by vicious and illegal bear hammering of its listed stocks to create panic and destabilise the markets.(Click for graph)

The group submitted a formal complaint to the Securities & Exchange Board of India and the stock exchanges asking them to “immediately investigate these illegal trades and take appropriate action to safeguard the interests of the over 11 million investors”, the statement said.

Reliance Infrastructure said its board would discuss the possibility of a share buyback on February 14, on the same day the company is planning to announce its results. “If the company is planning to go for a buyback, then the current shares prices are extremely good. It’s a good opportunity,” said Jagannadham Thunuguntla, strategist & head of research at SMC Global Securities.

The R-ADA group’s woes had a domino effect on the broader market.

The BSE Sensex declined 182.93 points, or 1.03 per cent, to close at 17,592.77. The BSE Midcap index lost 3.64 per cent, while the BSE Smallcap fell 4.30 per cent.

CBI, the country’s premier investigating agency, on Tuesday night arrested Shahid Balwa, promoter of Swan Telecom (now Etisalat DB), in connection with the 2G spectrum scam.

In a report tabled in Parliament in November last year, the comptroller & auditor general of India (CAG) had said that Swan Telecom, which was allotted a 2G licence in 2008, appeared to act as a front company on behalf of Anil Ambani-led Reliance Telecom.

At that time, Reliance Communications had contested CAG’s claim and said the R-ADA group had no shareholding in Swan Telecom at the time the licence was granted or at anytime thereafter.

Last month, Sebi had passed a consent order with regard to its probe into possible violation of securities market norms by R-ADA group companies R-Infra and RNRL. The case relates to a probe by Sebi in dealings in the shares of group firm Reliance Communications and investigations related to alleged violation of foreign investment norms.