Cyrus Mistry’s exit could evoke a knee-jerk reaction when the bourses open on Tuesday, say market experts. “The disclosure is not proper. You take a year to identify the replacement, give all the reasons for why he is the best choice, you mentor him and you take a minute to say he is replaced,” said Jimmy Patel, CEO, Quantum AMC.

Some felt the next Chairman would face a tough time steering the group.

Arun Kejriwal, Founder, KRIS Research, said: “First, there would be a knee-jerk reaction by market-men on their listed companies when trading resumes. However, the interim measure is only for four months. The problems for the group will start thereafter.”

According to analysts, the announcement presented a good opportunity to pick up a few good Tata scrips. “The uncertainty for shareholders rises as there would be conjecture on why this happened,” said Paras Bothra, VP, Equity Research, Ashika Stock Broking, “However, one should remember that the Tatas are a well-managed, professionally-run group with good corporate governance practices. There will be short-term volatility but this could be used as an opportunity to pick up a few good Tata scrips as they are likely to clarify their stance in the near future.”

Uncertainty ahead

Gaurang Shah, VP, Geojit BNP Paribas, expects uncertainty. “I think it’s more the uncertainty that will be an overhang. I think the fact they announced that Ratan Tata will only be interim Chairman for four months means that they have already shortlisted 2-3 candidates to take over, if you consider the time they spent finalising on Cyrus Mistry.”

But the change in leadership is unlikely to have any impact on their stock prices in the long term. “I do not foresee any big impact on their scrips in the long term,” concluded Varun Goel, VP and Fund Manager PMS Motilal Oswal Asset Management.

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