The Hindu Business Line : IL&FS Investsmart shrugs off E*Trade fall

IL&FS Investsmart, in which E*Trade holds 43.85 per cent stake, was up 4.12 per cent on the BSE and 5.39 per cent on the NSE. It touched a high of Rs 186.80 and Rs 189 on the BSE and NSE respectively. However, it opened down by about 15 per cent on the bourses following E*Trade’s adverse performance in the US bourses.

E*Trade plummets

E*Trade, a California-based brokerage, fell by a whopping 59 per cent on the US bourses on Monday due to whiffs of bankruptcy after a Citigroup Inc analyst commented on the company’s recent fourth quarter earnings projection. Tracking the company’s past performance and analysing its latest forecast, the Citigroup analyst said there is a chance the company may go bankrupt.

Shareholders of IL&FS Investsmart need not worry about their investment, say analysts, as there will not be any direct impact on the company.

“This is only a temporary phenomenon, it is just news of bankruptcy, and there are no quantum figures of the company’s financial position. There will not be an immediate affect on IL&FS,” says Mr Sanjay Kotari, Senior Research Analyst, Unitis Tower Wealth Management.

“In a way it is positive for IL&FS. Once E*Trade sells its assets, which will include its stake in IL&FS, the shares might go into better hands,” said the Director Research with a brokerage. E*Trade, the third largest online brokerage in the US, was the main reason the S&P 500 Index was down one per cent on Monday. It closed at just $3.55.

“Investors are aware of the fact that the E*Trade does not hold a controlling amount to affect IL&FS. This might be the reason why we saw business as usual on the IL&FS stock on Tuesday”, reasoned Mr R. Balagopal, Senior Vice-President, Fedex Securities Ltd.

“Now we have to wait till E*Trade comes out with its actual figures, to see the impact on IL&FS. As of now, there isn’t any short impact on IL&FS Investsmart or the parent company,” said Mr Kotari.

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