Edelweiss Financial Services fell 1.96% to Rs 107.80 after the company said it will appear before the Enforcement Directorate on 15 January 2020.Edelweiss Financial Services clarified during trading hours today, 14 January 2020, it received a communication from the Office of the Enforcement Directorate to represent and appear before them on 15 January 2020. The company said it will do the needful.
On Friday, 10 January 2020, the media reported that Edelweiss Financial Services chairman 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.
Rashesh Shah on Sunday, 12 January 2020, clarified that 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.
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.
In the past one month, Edelweiss Financial Services dropped 7.14%, underperforming the Nifty Financial Service index's 1.49% rise in the same period.
On the technical front, the stock's RSI (relative strength index) stood at 43.405. 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 115.46 and its 200-day moving average (DMA) placed at Rs 138.80, both of which would serve as a resistance levels in the near term.
The company's consolidated net profit slumped 81.2% to Rs 51.17 crore on 10.1% decline in total income 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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