Infibeam Avenues’ shares even fell 73% on Friday after a WhatsApp announcement thwarted alleged corporate governance issues within the company. According to Satyam Computers Services, this is the steepest one-day event, which fell by 83% on January 7, 2009 after the bursting of accounting fraud.
Infibeam, India’s largest publicly traded online trading company, shed nearly 9,200 crore of equity on Friday. The company’s market capitalization rose from 13,105 crore to 3,900 crore on Thursday. Infibeam shares closed at Rs 58.80, Rs 138.75 or 70.24% from the previous day.
The WhatsApp message attributed to the Equirus brokerage company raised questions about the company’s accounting practices.
The Notice indicates that the Company has granted a non-interest bearing interest-free loan to a subsidiary with a negative net asset value, which must be repaid over eight years. The note also mentions that the company has categorized its co-founder, who still holds a significant share of the shares, as non-promoters. This led to a sale of shares, said dealers.
Equirus Capital has refused to issue the grade.
At a request from ET, the company spokesman said, “The company has provided unsecured interest-free loans to its wholly owned subsidiary NSI Infinium Global since its inception, which are short-term loans repaid on demand and held by NSI solely for its own use Trading Company. ”
“In addition, the promoters have not changed the list of promoters identified and disclosed during IPOs of the Company.”
Brokers said the initial inventory decline had triggered margin calls and forced them to reduce their loan positions. Settlement by mutual funds that had bought Infibeam shares in the sale of their futures contracts was down.
“The arbitrage funds had to sell their positions, resulting in substantial sales in an otherwise nervous market, which led to speculation of all kinds and cascade effects on the stock price,” said Dev Choksey. , Managing Director of KR Choksey shares.
“The cash settled derivatives markets are unfavorable to investors, and I’m pretty sure the bear market bearer will have a hard time accepting the market if the buyer is weak because he knows the buyer I do not have the money to to counteract his position, “he added.
Arbitrage funds exploit the price difference between Spot Market and Derivatives Market by buying and selling shares on the Spot Market.
The arbitrage trades held Infiream shares valued at 423 million rupees as of August 31, according to Value Research.
The e-commerce company had in March 2016 an IPO of up to 450 crore. From the IPO to 17 September, this share has increased by 436%.
Such a price decline is nothing new for Infibeam. The stock fell 40% on 25th September 2017 and 40% on 29th December 2017. On September 21, the stock fell 40%. As in June 2018, Nomura Singapore held 2.5% of the company. The Polus Global Fund held 1.06%.
Some say stocks like Infibeam should not be included in the derivatives segment.
“The stock market should use qualitative factors that take into account all measures taken by R & D segments, not just statistical parameters,” said Rajesh Baheti, MD, Crosseas Capital Services.