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Virendra Verma

Mumbai , Jan. 22

DOES the stock market have an inkling of major corporate developments before they are announced? It would appear so if the spurt in stock price and volumes in the scrips of several companies that have gone through major corporate developments ahead of the official disclosure is anything to go by .

The companies whose shares have recorded appreciable price rise recently are ACC, Gujarat Ambuja Cement, Pantaloon Industries, United Breweries, Sintex and Blue Dart Express.

The upward movement in these stock prices has been in the range of 8 per cent to 200 per cent and mostly one month before the corporate action has been made public.

The movement in the share price has also been inversely related to the liquidity of the stock, which means that a highly liquid scrip has not moved much while an illiquid scrip has shown more volatility.

For instance, the stock price of the cement company ACC gained around 8 per cent (from Rs 338.7 to Rs 365.35 on BSE) since the beginning of this month until the day before the Holcim deal was announced. During this period, volumes rose by 500 per cent on the BSE and 350 per cent on the NSE.

Shares of Gujarat Ambuja Cement, which has made an open offer along with Holcim to ACC shareholders, gained 11 per cent with trading volumes jumping 400 per cent. The stock price of Ambuja Cement Eastern, a less liquid counter, gained by 55 per cent during the same period and the trading volumes jumped 500 per cent.

The scrip of United Breweries, which made preferential issue to Scottish & Newcastle Plc at Rs 575 per share in mid-December, moved up by more than 200 per cent between the beginning of November 2004 and until the official announcement in the third week of December.

Following the company's first public announcement on the bourse that it had received "unsolicited offers for a strategic alliance'' in the third week of November, the stock price of the liquor major had jumped 130 per cent in just three weeks' time.

The stock price of Pantaloon Industries rose by 85 per cent in four weeks ahead of the company's acquisition of Indus League, a readymade garment company. Pantaloon bought out ICICI Ventures' stake in Indus League. ICICI Ventures also picked up a stake in Pantaloon.

Shares of IV Fluid making company Core Healthcare jumped up by 140 per cent in less than three weeks. In this case, Nirma bought out the asset of the company.

Shares of Blue Dart Express, in which DHL Express bought 68 per cent stake in second week of November, witnessed an upward movement of 50 per cent in five weeks' time.

Other stocks where spurts were noticeable ahead of the official announcement are AVT Natural Products and Sintex Industries.

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