With just three days left for the expiry of the March derivatives series, the battle between bulls and bears at the counter of Akruti City intensified further on Monday.
The stock of Akruti City, which plunged sharply by 28% on Friday following the NSE excluding it from the derivatives segment and moving it to the trade-to-trade segment, further dipped by 14.83%, or Rs 238.5, in the early trading hours on Monday, with investors holding the stock trying to find a suitable exit.
The stock, however, rebounded by 26.72%, or Rs 365.85, from its day?s low to close at Rs 1,734.85. This, as the bears that have taken short positions of 11 lakh shares in the F&O segment, tried to cover their positions at a lower price.
?Now, it?s a panic situation on both sides,? said a derivative analyst with a leading institutional broking house. ?The game is still on, and there are no guesses as to who will win; both sides were caught off guard by the regulators action. At every given opportunity, both parties are trying to make an exit, making the stock highly volatile,? he noted.
Other derivative experts are of the view that given the fact that the floating stock is about 5 lakh shares out of a total public float of 67 lakh, with majority being cornered by informed circles, it would increase the problems for the bear cartel.
With bears trapped in the F&O segment with 11 lakh shares short sold, derivative analysts foresee two possibilities: short positions may get squared off, in which case the stock price may again taste a new peak in the range of Rs 2,300-2,500 on the expiry day, or the bears may opt to let the march derivative series expire and incur heavy losses thereon.
A derivative analyst with a domestic brokerage firm said, ?There is a possibility that the bear cartel may let the contract expire without squaring of its position with a stop loss at Rs 2,200. With the floating stock remaining very less, there are chances of the stop loss getting triggered, in which case the stock might witness a new peak on the expiry day.?
According to market sources, the bear cartel comprising four institutional investors had short sold 11 lakh shares on January 14 and 15, 2009, after suspecting the ability of the promoters of Akruti City to repay a loan amount of Rs 140 crore from Barclays Bank by pledging about 70 lakh shares with a trigger of Rs 610. Owing to this, the stock price of the company hit a 52-week low of Rs 550 on January 15.