Scrips of most of Tata Group subsidiaries closed in the red on Thursday, a day after ousted Chairman of Tata Sons Cyrus P. Mistry alleged corporate misconduct at the company.
Tata Sons is the holding company of the Tata Group. Nearly all the subsidiaries of the industrial conglomerate opened the day's trade in the negative territory.
According to market observers, investors became cautious after Mistry on Wednesday indicated that the group was in a bad financial shape.
In his five-page letter to the board members of Tata Sons and the trustees of the Group, Mistry said a realistic assessment of the fair value of the "legacy hotspots" like IHCL, Tata Motors PV, Tata Steel Europe, Tata Power Mundra and Teleservices could "potentially result in a write down over time of about Rs 118,000 crore ($18 billion)".
He talked about "fraudulent transactions" of Rs 22 crore in the case of Air Asia involving non-existent parties in India and Singapore. He also railed against Ratan Tata's pet Nano project, saying it had entailed a loss of Rs 1,000 crore and should be "shut down".
Mistry's letter had also prompted the Indian stock exchanges BSE and NSE to seek clarification from Tata Group's leading listed firms like India Hotels, Tata Motors, Tata Steel Europe, Tata Power Mundra and Tata Teleservices.
Stocks of several well-known group companies like Tata Investment Corporation, Indian Hotels, Tata Global Beverages, Tata Chemicals and Tata Motors declined during the day's trade.
At the BSE, stock price of Tata Investment Corporation declined by 5.43 per cent to Rs 577.55, while the scrip of Tata Motors fell by 5.27 per cent to Rs 115.
Similarly, scrip of Tata Global Beverages dropped by 5.12 per cent to Rs 137.95, and that of Tata Chemicals declined by 1.98 per cent to Rs 538.60.
Besides, Tata Motors' stocks also receded by 1.44 per cent to Rs 521.85, while the scrip of Tata Power fell by 1.36 per cent to Rs 79.55.
In contrast, Tata Consultancy Services (TCS) stocks rose by 0.68 per cent to Rs 2,413.25. On the other hand, shares of Voltas declined by 0.90 per cent to Rs 381.55.
In addition, the scrip of Tata Sponge Iron edged lower by 3.98 per cent to Rs 590.15, and that of Tata Elxsi dropped by 2.44 per cent to Rs 1,241.85.
The Titan Company's scrip closed lower by 1.53 per cent to Rs 369.05. The stocks of Tata Communications ended the day's trade down 1.68 per cent to Rs 625.75.
"Most stocks of Tata Group companies witnessed a gap down opening and traded with bearish sentiments during the intra-day session on selling pressure," Dhruv Desai, Director and Chief Operating Officer of Tradebulls, told IANS.
"However, some recovery was seen from the lower levels in the second half of the session due to short covering and some speculative lower levels buying."
According to Anand James, Chief Market Strategist, Geojit BNP Paribas Financial Services: "Tata Group companies came under pressure with more news unravelling on Tata Sons Chairman's exit."
--IANS
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