Edelweiss Financial Services rose 6.18% to Rs 112.55 after the company's chairman Rashesh Shah denied links with Capstone Forex, which is being investigated by the Enforcement Directorate for foreign exchange rules violation.
Edelweiss Financial Services chairman Rashesh Shah on Sunday, 12 January 2020, said the company has no relationship with Capstone Forex. Shah said the allegation of FEMA (Foreign Exchange Management Act) violation is "false" and the company will fully cooperate in the investigation.
The Directorate of Enforcement (ED) had recently summoned Shah in connection with the company's dealings with Capstone Forex.
Shah said, "I am writing to you directly to assure you that Edelweiss has no relationship with Capstone Forex Pvt ltd and all allegations of FEMA violations are false". The chairman also said that he was unable to go in person to the ED and authorised senior representative had attended in person with the requisite information.
"Needless to say, if in the future any assistance or support to the investigation is requested from us, we will cooperate fully," he added.
Shah also denied media reports of him having any relation with Sanjay Nathalal Shah, Chartered Accountant and an independent director of a few of the group companies.
"Let me reiterate that he (Sanjay Nathalal Shah) has no other association with the Edelweiss Group, nor is he in any way related to me; you will appreciate that Shah is a common name," he said.
He also accused media of sensational reporting on "false allegations, conjecture and innuendo". The company will take appropriate legal action against the concerned media group in order to protect and reinforce the reputation of Edelweiss, he added.
On Friday, 10 January 2020, the media reported that Rashesh Shah was summoned by ED in connection with a Rs 2,000 crore forex scam. Shah's benami firms are under scanner the federal probe agency. The ED has busted the Rs 2,000 crore forex smuggling racket, reports added.
The S&P BSE Sensex was up 248 points or 0.60% to 41,847.96.
In the past one month, Edelweiss Financial Services slipped 3.05% to its current market price of Rs 112.55, underperforming the Nifty Financial Service index's 1.63% rise in the same period.
On the technical front, the stock's RSI (relative strength index) stood at 47.508. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30.
The stock was trading below its 50-day moving average (DMA) placed at Rs 115.20 and its 200-day moving average (DMA) placed at Rs 139.21, both of which would serve as a resistance levels in the upcoming trading sessions.
The company's consolidated net profit slumped 81.2% to Rs 51.17 crore on 10.1% decline in net sales to Rs 2,405.24 crore in Q2 September 2019 over Q2 September 2018.
Edelweiss Financial Services is engaged in providing investment banking and advisory services, and holding activities/investments. The company's segments include agency business, capital based business and life insurance.
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