IFCI stock plunge hits investors

The shares of Industrial Finance Corporation of India (IFCI) plunged by 23.41 per cent on Thursday after the stake sale of 26 per cent to strategic investors collapsed.

Thursday's decline was the biggest in a single day in the past 13 years, bleeding small investors and margin traders the most.

Several small investors had bought the IFCI shares at higher levels of Rs 100-plus, hoping that the stock would further run up to new highs following a turnaround in the company's fortunes after the entry of strategic investors.

The stock closed at Rs 76.70 on Thursday against its previous close of Rs 100.15, forcing several brokerage houses to ask clients to pay the mark-to-market losses or wind up their positions at the counter in the derivatives segment.

The general expectation in the market was that strategic investors might be bidding close to Rs 140 or Rs 135, which tempted investors to buy the stock at Rs 100-plus levels.

On Tuesday's stock price of Rs 100, the trader would have had to pay a 25 per cent margin on one market lot of 7,875 shares, which works out to around Rs 2.5 lakh.

Therefore, when the stock fell to Rs 77.05, nearly 80 per cent or over Rs 2 lakh of traders' margin money got wiped out, said dealers.

According to the data available on the National Stock Exchange (NSE) website, the standing market-wide position is over six crore shares currently.

"If the stock does not bounce back to Rs 90 or Rs 95 in the next three trading sessions before the F&O expiry, it is then likely that the stock may see a further downside," said a dealer.

In the cash segment, over 210 million shares were transacted on both BSE and NSE.