 "Financial Technologies tanks over 60%. Stay away, analysts warn")
The stock opened at Rs 487 and has seen a combined 2.30 million shares changing hands on the counter till 0941 hours, as against an average of less than one million shares that were traded daily in past two weeks. By 1100 hrs, the stock had tanked 55% on the National Stock Exchange (NSE) to Rs 254 levels.
It has tanked over 67% from a level of Rs 765 on July 12, compared to 2% drop in the benchmark S&P BSE Sensex.
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In a latest development, NSEL has also decided to merge the delivery and settlement of all pending contracts and deferred the same for a period of 15 days. Consequently, the positions outstanding in the contracts will be settled by way of delivery and payment after expiry of 15 days.
The exchange said it shall announce a revised settlement calendar and contracts due for settlement after this 15 days period.
“Suspension of contracts other than e-Series contracts by NSEL has taken a toll on the stock today. I feel that the valuation of Financial Technologies and MCX at the time of listing was quite steep and the stock was bound to correct. Besides, there were other issues/negative news flow that impacted sentiment,” said Kishor Ostwal, CMD, CNI Research.
Meanwhile, FTIL, last week, alleged weekend rumour-mongering by “unscrupulous elements” and laid the blame at the door of bear cartels who wish to see the company's share price falls.
“We would like to inform you that since July 15, 2013, there have been many malicious rumours afloat on various media. The series of rumours that are spread in the market have a pattern more particularly to spread on Friday and such rumours are spread by some unscrupulous elements with a design to depress the price of FTIL and damage its reputation,” said the company in an exchange announcement.
Stock strategy
Despite the fall, analysts suggest investors stay away from this counter.
“Though the counter can see some short covering given today’s steep fall of over 40%, one should stay away from this stock,” Ostwal said.
“Most of Financial Technologies’ profits came from NSEL since most of the contracts were routed through MCX. With the latest development, this will be impacted and will in turn impact the financial performance of the companies. I don’t think the order/decision will be reversed and the stock has found a base yet. There are better bets available in the market. Stay away from this counter,” said an analyst with a local brokerage.
Points out Ashish Chopra, an analyst with Motilal Oswal Research: “In 2012 – 13, of the consolidated net profit of Financial Technologies, around Rs 127 crore, or 56%, came through NSEL. Hence, the stock has seen a sharp reaction in trade today.”
Analysts in the F&O (derivative) space suggest that the counter has seen built up of shorts position and added more open interest (OI) in last two days by more than 100%, which indicates aggressive shorts in the stock. It added OI by 95% in this morning with fall by more than 50%. The way stock has fallen and longs have been trapped; it is quite tough to see any immediate sustainable bounce back, they suggest.