The stock of Unitech declined sharply on Tuesday on the back of reports about the alleged involvement of company’s Managing Director, Sanjay Chandra, in a taped conversation that led to the CBI removing a public prosecutor of the 2G case.

The stock of the company ended the day at Rs 28.75, down 18 per cent from its previous close (Rs 35 per share). The stock opened the day at Rs 34 but started falling immediately. During the morning session, it touched the day’s low of Rs 26.35, down 24.7 per cent from its previous close.

This has fuelled the selling in the other companies such as DB Realty and Reliance Communications that were linked to the 2G scam.

DB Realty slumped 20 per cent to Rs. 98.75 before recovering marginally to close 18 per cent lower at Rs 101. RCom ended at Rs 73.5, down 2 per cent.

Post the dramatic fall in the first half, the stock picked up and remained relatively flat. According to industry experts, earlier also the company has had many issues pertaining to corporate governance, among others, that affected the stock performance.

“The company tried to address all such issues by taking measures, like restructuring the debt, to help stock movement. However, today’s news impacted the stock badly and would continue to affect it for some more time to come,” said Madhumita Ghosh, head of research, Unicon Financial Intermediaries.

The stock of the company from September 2012 till Monday (Feb 11, 2013) had shown significant growth. Its share price grew 89 per cent. Taking into consideration Tuesday’s fall of 18 per cent, the stock has fallen by about 55 per cent.

However, analysts said the stock is expected to go either sideways or fall further. Analysts said the company’s stock performance will continue to be affected for some time by the news of the CBI-questioning.

The conversation referred to in the news reports was allegedly between Chandra and a CBI public prosecutor, A K Singh. Singh allegedly in the conversation spoke about the deposing of a key prosecution witness in the 2G case hearing at the special court.

While the realty company has denied their MD’s involvement, the CBI on its part has removed the prosecutor.

sneha.p@thehindu.co.in

(This article was published on February 12, 2013)
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