The ACC stock was hammered down to a low of Rs 827, from the day's high of Rs 903. Amidst bear hammering, the counter clocked a phenomenal volume of 11.9 lakh shares. Reflecting the knee-jerk reaction to the announcement of the company to meet on December 8 to consider a rights issue, the stock sharply fell by 7.98 per cent in mid-session and closed at Rs 828 on NSE and at Rs 827.25 on BSE. The stock was traded at a further discount of Rs 5 at Rs 823 in kerb deals.

The market was rife with rumours that with thesub-divided shares, ACC's rights issue could be pegged at a price of Rs 70, at a premium of Rs 60, while the ratio would be in the band of 2:5. This speculation led to a steep fall in the stock as in the worst scenario market expects the rights to be priced at a discount of 20 per cent to the current market price.

The company intimated the Bombay Stock Exchange on Thursday that its board of directors would meet to consider the issue of preferential allotment of warrants to the existing promoter group and the sub-division of the existing shares into Rs 10 each.

"The rights issue has come at a time when the cement commodity cycle is weak. The stock market is also in a bearish phase. It is quite surprising to see this unusual development. This could be a move by the promoters to enhance their stake, considering that shareholders have very little interest in the stock.

Therefore, rather than merely considering it as a fund raising exercise it should be perceived more as a means to enrich shareholder valueby the promoters themselves," explained Hiren Ved of Prime Securities.

Research analysts also say the company has considered the `replacement value' which is much higher and, therefore, it may be worthwhile to buy the stock at current values. The explanation stands true in the context of the promoters increasing their stake.

"The decision to sub-divide the shares will have a positive impact on the liquidity at the counter. However, the impact should be marginal," said a senior official of an Indian brokerage outfit.

Market participants raised their eyebrows on the need to raise funds considering that the demand for cement is at its lowest ebb and capacity expansion makes very little sense. However, a section of market observers contradicted this view stating," At the bottom of the cycle adding capacity is a positive move".