Shares of Financial Technologies slumped 20 per cent, wiping-out nearly Rs 200 crore from its market valuation, after the government decided to merge scam-hit National Spot Exchange Ltd (NSEL) with holding group FTIL.
Following this, shares of FTIL went into a tailspin and slumped 20 per cent to Rs 169.65 -- its lowest trading permissible limit for the day -- on the BSE. The stock had opened the day on a positive note but as soon as the merger news came in investors pressed the selling button.
At the NSE, the stock nosedived 19.99 per cent to hit its lower circuit limit of Rs 169.70.
Massive selling in the stock pulled down the company's market valuation by Rs 195.28 crore to Rs 781.72 crore.
"Stock of Financial Technologies tanked 20 per cent intra-day after the merger news as market players are aware that Financial Technologies is not in favour of merger with NSEL," said Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio.
To ensure speedy recovery of dues for investors and others hit by Rs 5,600-crore "fraud" at the National Spot Exchange Ltd, the government today ordered merger of the scam-hit firm with its holding company FTIL.
The decision, which comes over a year after the payment scam broke out at NSEL in July 2013, has been taken in "essential public interest" as the exchange is "not left with any viable, sustainable business while FTIL has necessary resources to facilitate speedy recovery of dues".
The move to merge NSEL with FTIL -- possibly the first major government intervention in a scam-hit private sector entity since the Satyam case in 2009 -- would take a final shape after taking into account submissions or objections made by the shareholders and creditors of the two companies.
NSEL was set up as an electronic exchange for spot trading in agriculture and food commodities by Jignesh Shah- led FT Group. Financial Technologies (India) Ltd is the holding company of this group, which had also set up commodity bourse MCX and stock exchange MCX-SX, among other exchange ventures.
