THE stock price of Essar Steel has been witnessing a declining trend over the last few days.

The stock is down from its recent top of Rs 70 last month. In the last one week, it has fallen by more than 25 per cent.

On Tuesday, the stock was down 10 per cent at Rs 44.20 on the BSE with volumes of 1.11 crore shares; on the NSE, it was down 10 per cent at Rs 44.10 with volumes of 2.24 crore shares.

Dealers said share prices began to move down after the capital restructuring of the company was announced where 4 shares out of 10 shares will be cancelled and in lieu shareholders will get four 0.01 per cent redeemable preference shares to be paid in 2017 onwards.

Several market players are not impressed with the restructuring of the company and have started selling the stock. Several market players, who had bought shares through borrowed funds, are the major sellers in the stock. Trading in the stock will also be suspended for sometime from Friday and this is also creating panic as several short-term players are exiting the stock.

UB group shines on new focusVIJAY Mallya's UB group companies shares are still maintaining firm ground at a time when there is selling in most of the counters. This trend was also seen on Tuesday.

Some of the UB group stocks that are in action include McDowell (up 1.09 per cent at Rs 286.40 on BSE), United Breweries (up 3.51 per cent at Rs 425.15), UB Holdings (up 5 per cent at Rs 256.95). Even the stock of Shaw Wallace, in which McDowell is taking majority stake, was also up by 0.45 per cent at Rs 225.

Dealers attributed the interest in the stocks of the group to the plans of consolidation of companies into a single entity. Moreover, the launch of new airline under UB Holdings is also seen as positive for the group companies' shares.

The talk is that after the group's spirit business companies are consolidated, a big stake would be given to a strategic investor or private equity investors. But this will take some time.

Due to this, several market players are picking up in these counters.

Defensive bet at HDFCON a day when there was selling in several index stocks and the market players turning bearish on the stock market, some investors bought the shares of HDFC.

Dealers said this is due to the hope that HDFC may provide good returns to them in an uncertain or bearish market environment. Some of the big investors bought shares of the housing finance company on expectations that it will provide them with steady returns even if the market falls from this level.

On Tuesday, the stock price of HDFC gained 2.55 per cent at Rs 707 on the BSE with volumes of 95,992 shares; on the NSE, it closed at Rs 705.35, up 2 per cent, with volume of 3.16 lakh shares.

Virendra Verma

(This article was published in the Business Line print edition dated April 20, 2005)
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