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Financial Technologies (FTIL), the promoter of the crisis-ridden National Spot Exchange (NSEL), has gained around 120% since August 30 amidst expectations that the group may get some relief from the speculated sale of NK Proteins, a borrower company.
FTIL was trading at Rs 223.95 up 21.6% from its previous close at 10.40 hrs. While the reversal in broader market trend has helped the rise, brokers attribute the spike in last two, three sessions to the deal talks.
“That trade is because of rumours that one of the troubled borrowers will be sold off and the proceeds will give some cushion to the group,” said Arun Kejriwal of Kejriwal Research and Investment Services.
“That will also help secure part of the bridge loan by FT given to NSEL,” he added.
Market circles and social media were abuzz with the deal and even proposed valuations. Senior broker and managing director of Asit C Mehta Deena Mehta tweeted on her handle @Deenamehta “Cargill India may acquire 57% stake in NK Proteins, valuation of NK at 1150 cr. relief for NSEL investors?”
However, some dismissed these speculations as a two-year old news and said the Minneapolis-based firm may not be interested in the Ahmedabad-based cooking oil maker given its contingent liabilities of over Rs 929 crore to NSEL.
In March 2011, Mint had reported that Cargill India was in advanced talks with NK Protein for a 57% stake sale. NK Proteins is one of the portfolio companies of Brand Capital, the investment arm of Bennett, Coleman Co, the leading publishing house in the country.
There are talks of other negotiations between Jignesh Shah, the promoter of FT and NSEL and the investors in the exchange.
“There are negotiations with Shah on a daily basis. Top brokers and investors are trying to convince Shah to put in part of his promoter holding in FT in an escrow account as a guarantee and then go about the recovery. That will boost confidence of investors,” said a large investor of NSEL who was part of the negotiations.
A committee appointed by the finance ministry is also expected to submit its reports on September 12.
Kejriwal also pointed out that speculators are running amok in the stock though it is in the Futures and Options ban list due to heavv positions.
“Though in the ban list, brokers are allowed to trade by paying a fine of Rs 1 lakh. That is also driving speculative positions,” he said.
Though the stock has run up by 120% from its lows in the last ten days, that amounts to a recovery of 16% for large institutions such as Blackstone who had entered the stock at Rs 810 levels. For those who entered at peak prices of over Rs 1,223, that is an even smaller consolation.
